Traders on the floor of the New York Stock Exchange on Aug. 4, 2022.
Source: NYSE
S&P 500 futures rose Friday as Big Tech names Alphabet and Microsoft saw shares rally on strong earnings.
Futures linked to the broad market index climbed 0.7%, and Nasdaq 100 futures popped 0.95%. Futures on the Dow Jones Industrial Average gained 62 points, or 0.16%.
Shares of Alphabet jumped nearly 12% in extended trading following better-than-expected first-quarter earnings The company also authorized its first-ever dividend, as well as a $70 billion buyback.
Microsoft saw shares climb 4% after the software maker posted fiscal third-quarter results that surpassed Wall Street’s expectations.
The strength in these mega-cap stocks could give the major averages a boost after a losing day on Wall Street. The blue-chip Dow slid 375 points Thursday, while the S&P 500 and the Nasdaq Composite dropped 0.5% and 0.6%, respectively.
Thursday’s sell-off was triggered by new U.S. economic data that showed a sharp slowdown in growth and pointed to persistent inflation. Gross domestic product expanded by 1.6% in the first quarter, compared to a Dow Jones forecast of 2.4%.
Also, the personal consumption expenditures price index for the period rose at a 3.4% pace, well above the previous quarter’s 1.8% increase. The PCE price index is the Federal Reserve’s preferred inflation gauge. Futures market pricing shifted further following the report, with traders now anticipating just one interest rate cut this year, in September.
“The Fed will be more concerned by inflation running above their target in the first quarter than slower growth,” said Bill Adams, chief economist at Comerica Bank. “The Fed is likely to slow the pace of their balance sheet runoffs at one of the next few meetings, but wait until September to start reducing interest rates.”
Still, major averages are on track for a winning week. The S&P 500 is up 1.6% week to date, on pace to break a three-week losing streak. The Nasdaq has gained more than 2%, headed for its first positive week in five. The Dow is up by a more modest 0.3% this week.
So far, about 38% of the S&P 500 companies have reported quarterly results, and nearly 80% of those beat earnings expectations.
Investors are waiting for more earnings from big energy firms Chevron and Exxon Mobil Friday before the bell.
On the economic data front, March’s PCE reading will also be out on Friday morning. The report is expected to show inflation running at 2.6% on a 12-month basis, or 2.7% when excluding food and energy.
