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U.S. futures subdued; Microsoft, Alphabet to report - what's moving markets

Published 30/01/2024, 09:34 pm
© Reuters.

Investing.com -- U.S. futures hovered broadly around the flatline on Tuesday, with traders gearing up for a flurry of earnings, data, and central bank decisions this week. Artificial intelligence is set to be a major focus in the latest quarterly reports from tech behemoths Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) later today. Boeing (NYSE:BA) scraps an application to speed up the official certification of its upcoming 737 Max 7 jet following heavy scrutiny from U.S. lawmakers.

1. Futures subdued

U.S. stock futures were subdued on Tuesday, as investors awaited the release of fresh earnings from several big-name companies, a bevy of key economic data, and a major Federal Reserve policy decision.

By 05:30 ET (10:30 GMT), the Dow futures contract had shed 44 points or 0.1%, S&P 500 futures had fallen by 2 points or 0.1%, and Nasdaq 100 futures were mostly flat.

The main averages on Wall Street climbed in the prior session, with the benchmark S&P 500 in particular surging by 0.8% to a fresh record high close. The tech-heavy Nasdaq Composite jumped by 1.12% and the 30-stock Dow Jones Industrial Average added 0.6%.

In individual stocks, shares in iRobot (NASDAQ:IRBT) slumped by 8.8% after the robot vacuum maker and Amazon (NASDAQ:AMZN) announced they had mutually agreed to terminate a planned merger due to opposition from EU antitrust regulators. Elsewhere, SoFi Technologies (NASDAQ:SOFI) soared by 20.2% after the online personal finance group posted better-than-anticipated quarterly profit.

2. Microsoft, Alphabet earnings ahead

Tech giant Microsoft and Google-parent Alphabet are set to unveil their latest quarterly earnings after the close of trading in New York on Tuesday, in the first wave of potentially market-moving corporate results this week.

For Microsoft, the figures come after the Redmond, Washington-based company's stock market value topped $3 trillion for the first time ever last week.

Undergirding this sky-high valuation is Microsoft's investment in OpenAI, whose ChatGPT chatbot has become one of the focal points of recent growing enthusiasm over generative artificial intelligence. Analysts will likely be paying close attention to any comments from the firm's executives regarding how they hope to deploy the nascent technology, particularly at its crucial Azure cloud computing division.

Alphabet, meanwhile, has recently launched its own advanced AI play, dubbed Gemini. The YouTube-owner has lauded this model as a sophisticated tool for crunching disparate pieces of information like video, text, and audio, with Chief Executive Sundar Pichai calling it "one of the biggest science and engineering efforts we've undertaken."

AI will also be front-and-center for Advanced Micro Devices (NASDAQ:AMD) when the chipmaker posts results after the bell later today. Analysts already hiked their price target for the semiconductor group earlier this month, citing the benefits of elevated demand for AI-powered chips.

3. Boeing withdraws request for 737 Max 7 safety exemption

Boeing has confirmed that it is withdrawing its request for a safety exemption for a new series of its popular 737 Max planes, as the jetmaker wrangles with the continuing fallout from a dangerous mid-air door plug breach earlier this month.

The exemption would have allowed U.S. regulators to expedite the process of approving Boeing's upcoming 737 Max 7. Investors had widely anticipated that it would receive the official green light in the first half of this year.

More doubt now surrounds the timeline for the much-anticipated certification of both the Max 7 and Boeing's larger Max 10. According to Reuters, the company may be forced to roll out design changes more quickly than it had originally planned.

Boeing's decision also comes after it faced heavy pressure from U.S. lawmakers last week to withdraw its application for the exemption. U.S. Senator and aviation subcommittee chair Tammy Duckworth took a particularly strong stance against the request, arguing that it could have "catastrophic consequences on passenger safety."

4. BYD shares slip after disappointing profit forecast

BYD (SZ:002594), the Warren Buffett-backed group that recently dethroned Tesla (NASDAQ:TSLA) as the world's biggest electric vehicle (EV) maker by sales volume, has forecast full-year profit that missed analyst expectations, sending shares lower on Tuesday.

The Chinese EV company said it now expects to report annual profit of between 29 billion yuan and 31 billion yuan, implying a rise of as much as 86.49% versus the prior year. However, the pace would be far slower than its 2022 net earnings growth of 446%.

Analysts at Nomura noted that the outlook was 4% to 10% below their projections, the Wall Street Journal reported, citing a research note.

BYD flagged that it was facing "fierce competition" in China's EV industry, which has contributed to an intensifying price war among domestic automakers desperate to entice cost-wary consumers. Even still, the Shenzhen-based company said it has demonstrated "strong resilience" to these pressures, adding that it has been boosted by "rapid" expansion in overseas sales and expense reductions in its supply chain.

5. Crude inches up amid Middle East tensions

Oil prices inched up on Tuesday after the previous session’s losses, as escalating geopolitical tensions in the Middle East fueled supply concerns.

By 05:01 ET, the U.S. crude futures contract traded 0.5% higher at $77.13 a barrel, while the Brent contract climbed by $82.15 per barrel.

Crude markets are on edge after the U.S. vowed to take "all necessary actions" to defend its troops following a deadly drone attack in Jordan by Iran-backed militants, potentially resulting in regional energy supply disruptions in the oil-rich Middle East.

The crude contracts fell over $1 on Monday as a deepening real estate crisis contributed to worries about demand from China, the world's biggest crude consumer.

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