US Stock Futures Slip Amid Earnings Deluge – Capital Street FX
28 Apr 2023
Amazon’s Cloud Computing Division Faces Uncertainty as U.S. Stock Futures Slip Amid Earnings Deluge.
On Friday, U.S. stock futures slipped as investors digested a flurry of corporate earnings reports, with technology giant Amazon taking center stage. While Amazon initially reported strong first-quarter results, highlighting significant growth in its cloud-computing division, concerns about a potential slowdown in the sector dampened investor sentiment. Additionally, other major tech companies, including Snap, Pinterest, and Sony, faced challenges in meeting revenue expectations. As market participants awaited the Federal Reserve’s preferred inflation gauge, European economic data also contributed to the overall market sentiment.
U.S. Stock Futures Dip Amid Earnings Deluge:
By 05:23 ET (09:23 GMT), Dow futures had fallen by 168 points or 0.50%, while S&P 500 futures traded 20 points or 0.49% lower, and Nasdaq 100 futures dropped 51 points or 0.39%. Amazon’s stock experienced a reversal of earlier gains, declining over 2% in after-hours trading. Conversely, chipmaker Intel’s prediction of improved margins in the second half of 2023 provided a post-market boost to its shares.
Cloudy Outlook for AWS:
While Amazon initially celebrated the growth of its cloud-computing unit, Amazon Web Services (AWS), with revenue reaching $21.4 billion in the first quarter, concerns emerged during the CFO’s call with analysts. Chief Financial Officer Brian Olsavsky warned of a potential slowdown in AWS sales growth due to customers curbing spending amidst challenging economic conditions. Olsavsky stated that sales growth rates in April were approximately 500 basis points lower than those seen in the first quarter.
Earnings Reports from Tech Giants:
Amazon’s earnings report followed those of other U.S. tech giants, such as Google-parent Alphabet, Microsoft, and Meta Platforms (formerly Facebook). These companies have been implementing cost-cutting measures, including significant job reductions, to offset reduced customer spending amid concerns about the broader economic outlook.
Impact of Economic Data and the Federal Reserve:
Aside from corporate earnings, market participants also analyzed European economic data and awaited the Federal Reserve’s preferred inflation gauge. The European data provided additional context for traders, who were looking to assess global economic trends and potential impacts on their investment decision.
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