All eyes are on the U.S. market opening amid signs a rout in technology stocks awaits traders following disappointing earnings and forecasts from technology bellwethers.
Contracts on the tech-heavy Nasdaq 100 Index tumbled 2% Thursday, dragged by a 23% premarket rout in Facebook parent Meta Platforms Inc. after a weaker-than-expected revenue forecast. S&P 500 Index futures were 1% lower. The dollar gained for the first time in four days. Treasury yields rose.
Weak numbers from Meta to Qualcomm Inc. and Spotify Technology SA jolted investors who had bet a strong earnings season would keep equities attractive and counter some of their lingering worries including Federal Reserve tightening and stubborn inflation. That’s stalled the biggest four-day gains in MSCI Inc.’s gauge of world stocks and refueled traders’ switch into less expensive value stocks.
“What people care about is earnings and inflation,” said Ipek Ozkardeskaya, a senior analyst at Swissquote. “Disappointing Facebook results, and a plunge in Meta shares in the afterhours trading calls for a red session in the U.S.”
Meta shares, which had plunged 22% in late New York trading, widened its losses in Thursday’s premarket session. NVidia Corp. and Qualcomm lost more than 3%. Amazon.com Inc., which will post its financial results after U.S. market hours, slid 3.5%.
Europe’s Stoxx 600 gauge fell close to its 100-day moving average. Gains for telecommunications and utilities companies limited the decline.
In Europe, investors focused on interest-rate decisions by the European Central Bank and the Bank of England. The BOE hiked its key rate and signaled it would start running down bond holdings. The pound briefly advanced.
The ECB held its interest rates and said net buying under its emergency support program will end in March. The euro slid.
Treasuries sold off, with the 10-year rate rising three basis points.
The poorly received earnings reports from the U.S. tech giants are a challenge for dip buyers hoping that corporate performance will ease worries about central bank interest-rate hikes. Markets have swung sharply and stocks are nursing losses this year as officials pare stimulus to curb inflation.
“Volatility is here to stay,” Anna Han, equity strategist at Wells Fargo Securities, said on Bloomberg Television. “Our outlook for 2022 was that we’d see more spikes in volatility. With that choppiness, with that unpredictability, investors are going to express that by compressing multiples.”
Oil fell from a seven-year high eased from a seven-year high as traders waited to see whether OPEC+ can deliver on its latest promised increase in supply.
Meanwhile, data showed U.S. initial jobless claims fell more than expected last week to 238,000. That follows this week’s ADP figures that showed employment at U.S. firms shrank in January by the most since the early days of the pandemic. Equity and bond markets largely ignored the data as they focused on earnings and Fed policy.
What to watch this week:
- Earnings are due from Amazon, Ford Motor
- Bank of England, European Central Bank rate decisions, Thursday
- Fed Board of Governors confirmation hearing, Thursday
- U.S. factory orders, initial jobless claims, durable goods, Thursday
- U.S. payrolls report for January, Friday
- Winter Olympics kick off in China, Russia’s President Vladimir Putin due to attend opening ceremony, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 fell 1% as of 8:32 a.m. New York time
- Futures on the Nasdaq 100 fell 2%
- Futures on the Dow Jones Industrial Average fell 0.2%
- The Stoxx Europe 600 fell 0.5%
- The MSCI World index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.2% to $1.1286
- The British pound was little changed at $1.3583
- The Japanese yen fell 0.4% to 114.90 per dollar
Bonds
- The yield on 10-year Treasuries advanced three basis points to 1.80%
- Germany’s 10-year yield advanced two basis points to 0.06%
- Britain’s 10-year yield advanced eight basis points to 1.34%
Commodities
- West Texas Intermediate crude fell 1.3% to $87.11 a barrel
- Gold futures fell 0.4% to $1,802.90 an ounce
