Futures climb as Alphabet, Microsoft results lift megacaps

By Thomson Reuters Apr 26, 2024 | 5:04 AM

(Reuters) – U.S. stock index futures advanced on Friday as megacap growth shares rebounded on the back of robust quarterly results from Alphabet and Microsoft, while investors awaited a key inflation print that could help shape U.S. monetary policy.

Alphabet jumped 11.5% in premarket trading after the Google-parent announced its first-ever dividend, a $70 billion stock buyback and beat estimates for first-quarter results.

The share surge could lead the search giant’s market value to top $2 trillion if premarket gains hold.

Lifting sentiment further, Microsoft gained 4% on beating Wall Street estimates for third-quarter revenue and profit, driven by gains from AI adoption across its cloud services.

Other growth stocks also rose on the results, with Amazon.com and Nvidia up 3.1% and 1.3%, respectively. Meta Platforms added 1.2%, recovering from a near 11% drop in the previous session, its steepest fall in 18 months.

On the docket for the day, Exxon Mobil, AbbVie and Colgate-Palmolive among others are slated to report their quarterly numbers before the opening bell.

With the earnings season in full swing, adjusted blended earnings for the first quarter are estimated to grow by 7.4% on a year-on-year basis, according to LSEG data.

The upbeat earnings in the week have propped up Wall Street’s main stock indexes for weekly gains, with the benchmark S&P 500 looking to snap three weeks of losses while the Nasdaq is set to snap four straight weeks of losses.

U.S. stocks had ended lower on Thursday as markets were stunned by data showing slower-than-expected U.S. economic growth and persistent inflation, coupled with a sell-off in large-cap stocks triggered by disappointing results from Meta Platforms.

Focus now shifts to the Personal Consumption Expenditures (PCE) index reading for March, the Federal Reserve’s preferred inflation gauge, due at 8:30 a.m. ET, to further ascertain the state of inflation and the timing of interest rate cuts.

The index is estimated to show a 2.6% rise in March on a year-on-year basis, as per economists polled by Reuters, compared with a 2.5% rise in February.

Money markets are pricing in just about 35 basis points (bps) of rate cuts from the central bank this year, down from nearly 150 bps seen at the beginning of the year, as per LSEG data.

At 5:40 a.m. ET, Dow e-minis were up 49 points, or 0.13%, S&P 500 e-minis were up 34 points, or 0.67%, and Nasdaq 100 e-minis were up 161 points, or 0.92%.

Among other stocks, Snap surged 23.7% premarket after the social media firm beat first-quarter estimates for quarterly revenue and user growth, as improvements to its advertising system delivered results faster than anticipated.

Shares of Pinterest also rose 4.3%.

Intel dropped 7.2% on forecasting second-quarter revenue and profit below estimates as it faces weak demand for its traditional data center and PC chips and trails in the surging market for AI components.

(Reporting by Shristi Achar A in Bengaluru; Editing by Maju Samuel)