US Futures Gain, Alphabet, Microsoft: Markets Wrap

(Bloomberg) — U.S. equity futures were buoyed by blockbuster earnings from Microsoft Corp. and Alphabet Inc., signaling growth in artificial intelligence.

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Google owner Alphabet rose as much as 12% in premarket trading, poised to add more than $230 billion to its market cap and surpass $2 trillion in valuation. Microsoft rose 4%. Companies beat Wall Street estimates with their latest quarterly results, fueled in part by demand for AI services.

The strong earnings were a relief to investors worried about high valuations in the technology sector, and came after the market was rattled by data showing a U.S. economic slowdown and stubborn inflation that pushed up Treasury yields. The question is whether the performance of a few tech megacaps can sustain a broader market rally.

While earnings will be the focus, the focus on Friday will be on US data, with the Federal Reserve's preferred measure of specific interest inflation. Treasury yields fell following yesterday's bond market losses as economic data pushed back expectations for policy easing. A level of the dollar remained steady.

“We have an alarming situation where the earnings of a few large companies are sending sentiment across the entire market,” said Justin Onukwuzi, chief investment officer at St. James Place Management. “We've seen a little bit of volatility driven by earnings and rate cuts, and that's likely to continue.”

JPMorgan Chase & Co. According to strategists, nearly 80% of S&P 500 companies that have reported so far have beaten analysts' earnings estimates. However, stock price reactions have been limited, with better-than-expected results seen as below-average upside, while those missing estimates have been penalized more than usual, the strategists wrote. More than 50% of S&P 500 companies have yet to report.

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In other earnings-related moves, Exxon Mobil Corp. after missing EPS estimates. fell as much as 2.8%, while Intel Corp. It fell more than 7% after giving weaker-than-expected guidance.

Meanwhile, the yen's slide against the dollar has traders waiting for any hint of Japan's intervention. The yen moved sharply from the day's low to its high following the Bank of Japan's decision to keep monetary policy unchanged.

“After the BOJ decision in September 2022, if the yen falls further from here, the likelihood of intervention increases,” said Hirofumi Suzuki, chief currency strategist at Sumitomo Mitsui Banking Corp. “It's not position, but it's speed. It's what drives action.”

The Stoxx Europe 600 index rose as technology stocks led the way. Miners rose as copper hit $10,000 a tonne for the first time in two years, although Anglo American Plc underperformed after rejecting a proposed $39 billion takeover of BHP Group. The chemicals sector was in the red after IMCD NV's disappointing earnings.

Thyssenkrupp AG rose more than 10% after Czech billionaire Daniel Kretinsky's EP Corporate Group agreed to take a 20% stake in the German company's troubled steel unit. Amundi SA rose after reporting first-quarter net income that beat the average analyst estimate. NatWest Group Plc advanced after an earnings beat.

Elsewhere, gold and silver rose even as the precious metal headed for weekly losses. West Texas Intermediate crude rose to a more than one-week high, on pace for a weekly advance.

Highlights of this week:

  • US personal income and spending, the PCE deflator, University of Michigan Consumer Sentiment, Friday

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Some key movements in the markets:

Shares

  • S&P 500 futures were up 0.7% at 6:46 a.m. New York time

  • Nasdaq 100 futures rose 1%

  • Futures for the Dow Jones industrial average rose 0.1%

  • The Stoxx Europe 600 rose 0.7%

  • The MSCI world index rose 0.2%

Coins

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was unchanged at $1.0730

  • The British pound was little changed at $1.2511

  • The Japanese yen fell 0.7% to 156.76 per dollar

Cryptocurrencies

  • Bitcoin fell 0.9% to $64,221.25

  • Ether fell 1.3% to $3,132.5

Bonds

  • The yield on 10-year Treasuries fell a basis point to 4.69%.

  • Germany's 10-year yield fell two basis points to 2.61%

  • Britain's 10-year yield fell one basis point to 4.35%.

materials

  • West Texas Intermediate crude was up 0.7% at $84.15 a barrel.

  • Spot gold rose 0.7% to $2,349 an ounce

This story was produced with the help of Bloomberg Automation.

–With assistance from Richard Henderson, Yumi Teso and Sujata Rao.

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