In the evening trading session on Wednesday, U.S. stock index futures faced a notable decline, primarily influenced by a resurgence of weakness in heavyweight technology stocks. This downturn was triggered by disappointing second-quarter guidance provided by Meta Platforms Inc (NASDAQ:META), the parent company of Facebook. The technology sector’s performance was further exacerbated by a surge in Treasury yields, as investors became increasingly apprehensive about the forthcoming growth and inflation data. These economic indicators are widely expected to play a crucial role in shaping the Federal Reserve’s stance on interest rates.
S&P 500 Futures dropped by 0.6% to 5,075.00 points, while Nasdaq 100 Futures experienced a more pronounced decline of 1.1% to 17,460.75 points. Similarly, Dow Jones Futures fell by 0.2% to 38,591.0 points, reflecting the broad-based nature of the market downturn.
The significant decline in Meta Platforms Inc’s shares, plummeting by 15% in aftermarket trading to reach a near three-month low, was attributed to the company’s weaker-than-expected revenue guidance for the second quarter. Meta’s guidance indicated higher-than-anticipated spending on artificial intelligence initiatives, overshadowing the positive aspects of its stronger-than-expected first-quarter earnings. Consequently, this subdued outlook cast a shadow over the upcoming earnings reports from major technology peers, including Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc (NASDAQ:GOOGL). In the aftermath of Meta’s disappointing guidance, Microsoft and Alphabet also witnessed declines of approximately 2% and 3%, respectively, in aftermarket trading. Concerns emerged among investors that increased investments in artificial intelligence by technology giants could potentially offset any earnings gains derived from technological advancements.
Investor attention remains focused on the forthcoming first-quarter earnings reports from Microsoft and Alphabet, scheduled to be released after the closing bell on Thursday.
Wednesday saw a relatively modest performance from Wall Street indexes, with a rebound from near three-month lows being short-lived due to persistent concerns surrounding rising interest rates. The S&P 500 posted a marginal increase to 5,071.63 points, while the NASDAQ Composite managed to edge up by 0.1% to 15,712.75 points. However, the Dow Jones Industrial Average retreated by 0.1% to 38,460.92 points.
The second quarter commenced with Wall Street experiencing losses, which intensified last week amid signs of heightened inflation and hawkish rhetoric from the Federal Reserve. These developments prompted traders to recalibrate their expectations for an interest rate cut in June.
Market participants are eagerly awaiting the release of gross domestic product (GDP) data on Thursday and the Personal Consumption Expenditures (PCE) price index data on Friday. These economic indicators are anticipated to exert significant influence on the outlook for U.S. interest rates, with Treasury yields already on the rise in anticipation of these readings.
Mixed earnings reports further weighed on market sentiment, with United Parcel Service Inc (NYSE:UPS) and JetBlue Airways Corp (NASDAQ:JBLU) experiencing declines due to weak revenue and a disappointing outlook, respectively.
In aftermarket trading, social media stocks Snap Inc (NYSE:SNAP) and Pinterest Inc (NYSE:PINS) witnessed declines ranging between 4% and 6%, mirroring the downward trajectory of Meta Platforms Inc. Conversely, IBM (NYSE:IBM) registered a notable 8.3% decline following disappointing first-quarter earnings, compounded by the announcement of a $6.4 billion deal to acquire Hashicorp Inc (NASDAQ:HCP).
On a positive note, Ford Motor Company (NYSE:F) experienced a 1.7% increase in its share price following strong first-quarter earnings and optimistic guidance. Similarly, Chipotle Mexican Grill Inc (NYSE:CMG) recorded a gain of over 3% after surpassing expectations with its first-quarter earnings report. These positive developments provided some respite amidst the prevailing market uncertainties.