Disappointing Results From Apple, Amazon May Lead To Pullback By Nasdaq

The major U.S. index futures are currently pointing to a lower open on Friday, with stocks likely to give back ground after ending the previous session firmly positive.

A negative reaction to quarterly results from tech giants Apple (AAPL) and Amazon (AMZN) is likely to weigh on the tech-heavy Nasdaq, which ended Thursday’s trading at a new record closing high.

Shares of Apple are moving notably lower in pre-market trading after the iPhone maker reported fiscal fourth quarter earnings that matched analyst estimates but weaker than expected sales amid supply chain issues.

Online retail giant Amazon is also seeing significant pre-market weakness after reporting much weaker than expected third quarter results.

Meanwhile, energy giants Chevron (CVX) and Exxon Mobil (XOM) may move to the upside after reporting better than expected quarterly earnings.

Chevron is a Dow component and an advance by the company’s stock may help limit the downside for the blue chip index.

Stocks moved mostly higher during trading on Thursday, offsetting the pullback seen late in Wednesday’s session. With the upward move on the day, the tech-heavy Nasdaq and the S&P 500 reached new record closing highs.

The major averages saw further upside going into the close of trading. The Dow climbed 239.79 points or 0.7 percent to 35,730.48, the Nasdaq surged 212.28 points or 1.4 percent to 15,448.12 and the S&P 500 jumped 44.74 points or 1 percent to 4,596.42.

A positive reaction to the latest batch of earnings news from big-name companies helped stocks renew the upward trend seen in recent sessions.

Shares of Ford (F) moved sharply higher after the auto giant reported much better than expected third quarter earnings and raised its full-year guidance.

Brewer Anheuser-Busch InBev (BUD) also spiked after raising its full-year forecast following a strong third quarter.

Shares of Caterpillar (CAT) and Merck (MRK) also showed strong moves to the upside after the heavy equipment maker and drugmaker reported quarterly earnings that beat expectations.

On the other hand, shares of eBay (EBAY) came under pressure after the eCommerce giant reported better than expected third quarter results but provided disappointing guidance.

Adding to the positive sentiment on Wall Street, a report from the Labor Department showed initial jobless claims decreased for the fourth straight week in the week ended October 23rd.

The report said initial jobless claims dipped to 281,000, a decrease of 10,000 from the previous week’s revised level 291,000. Economists had expected jobless claims to come in unchanged compared to the 290,000 originally reported for the previous week.

With the modest decrease, jobless claims once again fell to their lowest level since hitting 256,000 in the week ended March 14, 2020.

Meanwhile, traders largely shrugged off a report from the Commerce Department showing a dramatic slowdown in the pace of U.S. economic growth in the third quarter, potentially viewing the data as old news.

The Commerce Department said real gross domestic product increased by 2.0 percent in the third quarter after jumping by 6.7 percent in the second quarter. Economists had expected the pace of GDP growth to slow to 2.7 percent.

The bigger than expected slowdown in GDP growth came as consumer spending rose by 1.6 percent in the third quarter after spiking by 12.0 percent in the second quarter.

Computer hardware stocks saw substantial strength on the day, with the NYSE Arca Computer Hardware Index surging up by 2.4 percent.

Significant strength was also visible among semiconductor stocks, as reflected by the 2.3 percent jump by the Philadelphia Semiconductor Index.

Shares of Wolfspeed (WOLF), formerly known as Cree, skyrocketed after the company reported a narrower than expected fiscal first quarter loss.

Biotechnology stocks also turned in a strong performance on the day, driving the NYSE Arca Biotechnology Index up by 1.8 percent.

Oil service, housing and commercial real estate stocks also moved notably higher, while gold stocks bucked the uptrend despite an increase by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are falling $0.48 to $82.33 a barrel after inching up $0.15 to $82.81 a barrel on Thursday. Meanwhile, after rising $3.80 to $1,802.60 an ounce in the previous session, gold futures are slumping $12.30 to $1,790.30 an ounce.

On the currency front, the U.S. dollar is trading at 113.80 yen versus the 113.58 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1633 compared to yesterday’s $1.1681.

Asia

Asian stocks ended Friday’s session on a mixed note despite new record closes on Wall Street overnight. Global supply chain disruptions, concerns over a lack of electricity supplies in China and weak earnings updates from Amazon and Apple kept underlying sentiment cautious as the month draws to a close.

Chinese shares advanced, with the benchmark Shanghai Composite Index closing up 28.92 points, or 0.8 percent, at 3,547.34, led by consumer staples, information technology and healthcare firms. Hong Kong’s Hang Seng Index dropped 178.49 points, or 0.7 percent, to 25,377.24.

Japanese shares reversed early losses to end modestly higher ahead of the country’s general election on Sunday. A cautious undertone prevailed after data showed Japanese industrial output fell for the third straight month in September.

The Nikkei 225 Index ended up 72.60 points, or 0.3 percent, at 28,892.69 on optimism around the domestic corporate outlook. The broader Topix finished marginally higher at 2,001.18.

Automotive components manufacturer Denso Corp advanced 1.7 percent and electronic application equipment maker Keyence soared 5 percent after reporting robust earnings.

Sony added 1.9 percent after reporting a surprise 1 percent increase in operating profit for its second quarter. Panasonic plummeted 6.2 percent despite raising its profit forecast for the year to March 31.

Tech heavyweight Advantest declined 2.8 percent after its annual forecast missed consensus.

Australian markets fell sharply as rising inflation remained a key concern and investors priced in a rate hike as soon as early next year.

In economic news, Australian retail sales rebounded in September from three months of steep declines, data showed earlier in the day.

The benchmark S&P/ASX 200 Index tumbled 106.70 points, or 1.4 percent, to finish at 7,323.70, marking its worst day and week since October 1. The broader All Ordinaries Index ended down 100.60 points, or 1.3 percent, at 7,639.10.

Lender Westpac gave up 2.1 percent ahead of its full-year results due on Monday, while the other three big banks lost between 1.6 percent and 2.5 percent.

Origin Energy, Oil Search, Santos and Woodside Petroleum dropped 1-2 percent as oil prices remained on track for their first weekly drop since August amid concerns about erratic demand growth. Whitehaven Coal shares slumped 3 percent.

Mining giant BHP shed 1.2 percent and Rio Tinto declined 2.7 percent on weaker iron ore prices.

Seoul stocks fell for a third straight session as weaker than expected earnings by major U.S. tech firms offset data showing that South Korea’s industrial output and retail sales rebounded in September. The Kospi ended down 38.87 points, or 1.3 percent, at 2,970.68, with tech shares leading market declines.

Market bellwether Samsung Electronics Co. fell 1.3 percent and No. 2 chipmaker SK Hynix tumbled 3.3 percent.

Europe

European stocks have fallen on Friday, with inflation worries and disappointing quarterly earnings results from Apple and Amazon denting sentiment.

While Amazon badly missed on earnings and revenue, Apple warned supply chain disruptions would be an increasing obstacle in the final quarter.

The German DAX Index has fallen by 0.7 percent, while the U.K.’s FTSE 100 Index and the French CAC 40 Index are down by 0.4 percent and 0.3 percent, respectively.

The euro area economy grew at a slightly faster pace in the third quarter, a preliminary flash estimate from Eurostat showed earlier today.

Gross domestic product grew 2.2 percent sequentially after expanding 2.1 percent in the second quarter. Economists had forecast quarterly growth to ease to 2 percent.

On a yearly basis, economic growth slowed markedly to 3.7 percent from 14.2 percent a quarter ago. Nonetheless, the pace of growth was faster than the economists’ forecast of 3.5 percent.

The EU27 logged sequential growth of 2.1 percent in the third quarter ,taking the annual expansion to 3.9 percent.

Separately, flash data from Eurostat showed that Eurozone inflation accelerated sharply to the highest since 2008 on higher energy prices.

Inflation rose to 4.1 percent in October from 3.4 percent in September. This was also faster than economists’ forecast of 3.7 percent. A similar higher rate was last registered in July 2008.

Tech stocks are losing ground in reaction to the downbeat holiday-quarter forecast from iPhone maker Apple..

NatWest Group has also shown a notable move to the downside despite delivering profit figures comfortably ahead of expectations.

Similarly, building materials firm Saint-Gobain has moved lower despite reporting a rise in nine-month sales.

On the other hand, Luxury eyewear group EssilorLuxottica has advanced after raising its full-year guidance.

Air France-KLM shares have also jumped after the airline group significantly reduced its net loss in the third quarter.

BNP Paribas has also risen. The lender launched a share buyback program for a maximum total of 900 million euros ($1 billion) after posting a strong rise in third-quarter profit.

Daimler has also moved higher after the carmaker posted a higher quarterly profit despite a 30 percent drop in Mercedes-Benz sales due to the chip crisis.

Aircraft engine manufacturer MTU Aero Engines has also jumped. The company reported that its third quarter net income was 87 million euros, significantly higher than last year’s 16 million euros.

U.S. Economic Reports

A report released by the Commerce Department on Friday showed personal income in the U.S. decreased by much more than expected in the month of September.

The Commerce Department said personal income slumped by 1.0 percent in September after inching up by 0.2 percent in August. Economists had expected personal income to edge down by 0.2 percent.

The bigger than expected drop in personal income primarily reflected a decrease in government social benefits, both in unemployment benefits and “other” benefits.

Meanwhile, the report showed personal spending climbed by 0.6 percent in September after jumping by an upwardly revised 1.0 percent in August.

Economists had expected personal spending to rise by 0.5 percent compared to the 0.8 percent increase originally reported for the previous month.

At 9:45 am ET, MNI Indicators is scheduled to release its report on Chicago-area business activity in the month of October. The Chicago business barometer is expected to dip to 63.5 in October from 64.7 in September, although a reading above 50 would still indicate growth.

The University of Michigan is due to release its revised reading on consumer sentiment in the month of October at 10 am ET. The consumer sentiment index is expected to be unrevised from the preliminary reading of 71.4, which was down from 72.8 in September.

Stocks In Focus

Shares of Zendesk (ZEN) are moving sharply lower in pre-market trading after the customer service platform operator announced an agreement to acquire SurveyMonkey parent Momentive (MNTV) for $4.1 billion in stock. Momentive is also moving lower following the news.

Disk drive maker Western Digital (WDC) is also likely to come under pressure after reporting better than expected fiscal first quarter results but providing disappointing guidance for the current quarter.

On the other hand, shares of U.S. Steel (X) are likely to see initial strength after the steel producer reported third quarter results that beat estimates, raised its dividend to $0.05 per share and announced a $300 million stock buyback.

Consumer products company Newell Brands (NWL) may also move to the upside after reporting better than expected third quarter results and raising its full-year guidance.