U.S. stock futures were bouncing on Wednesday after Microsoft’s earnings results suggested the tech-led sell-off in April may be overdone.
Nasdaq 100 futures gained 0.9%, one day after the Nasdaq Composite’s worst day since 2020. Dow Jones Industrial Average futures rose 370 points, or 1.1%, and S&P 500 futures gained 0.9%.
Microsoft’s shares jumped 5% in premarket trading after the company beat analyst expectations on the top and bottom lines. Looking forward, the company’s revenue guidance for each of it three major business lines exceeded analysts’ current forecasts.
Shares of other major tech stocks gained in premarket trading. Salesforce, Intel and Apple were all higher.
On Tuesday, the tech-heavy Nasdaq Composite dropped further into bear market territory, losing 3.95% and hitting a fresh low for the year. That was its biggest daily loss since September 2020. The index is now sitting now roughly 23% off its high. The Dow Jones Industrial Average shed 809.28 points, or 2.4%. The S&P 500 lost 2.8% for its worst performance since March and closed below a key support level in 4200.
In April, the S&P 500 is down 7.8%, the Nasdaq has lost 12.2%, and the Dow has declined 4.2%.
Facebook parent Meta is set to report earnings on Wednesday after the bell, with Apple and Amazon reporting earnings on Thursday. Investors will be watching to see if tech companies’ actual results prove the intense selling in April in the sector’s shares as misplaced.
While Microsoft’s earnings gave investors some encouragement after the bell Tuesday, Alphabet’s earnings results disappointed. Alphabet’s earnings missed on the top and bottom lines because of a shortfall in YouTube advertising revenue. What’s more, the Alphabet CFO warned on the conference call of another potentially weak quarter ahead.
Meanwhile, shares of Robinhood also shed 1% in premarket trading after the retail brokerage said it is cutting back on staff. The company cited “duplicate roles and job functions” after its rapid expansion last year.
Those moves came as fears of a global economic slowdown spurred investors to ditch tech stocks ahead of their quarterly results.
“It’s a high volatility, low volume market that’s concerned about two things,” said Art Hogan, chief market strategist at National Securities. “One is, you know, Federal Reserve policy, and the other is the China lockdowns and how long they last.”
On the economic front, investors will be watching for the latest data on weekly mortgage applications, international trade and pending home sales.
T-Mobile, Boeing, PayPal and Ford are also reporting earnings on Wednesday.