U.S. stock futures bounced Wednesday after Microsoft’s earnings results suggested the tech-led sell-off in April may be overdone.
Nasdaq 100 futures gained 0.5%, one day after the Nasdaq Composite’s worst day since 2020. Dow Jones Industrial Average futures rose 300 points, or 0.9%. S&P 500 futures gained 0.7%.
Microsoft’s shares jumped 4% 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.
“We’re trying to find a place of stability,” Kari Firestone, chairman and CEO of Aureus Asset Management, told CNBC’s “Squawk Box.” “We need to see a few more names come in with really strong, reliable and sustainable earnings so investors can get back on board.”
Shares of other major tech stocks gained in premarket trading. Salesforce, Intel and Apple all inched 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 S&P 500 on Tuesday lost 2.8% for its worst performance since March and closed below a key support level in 4200. The Dow Jones Industrial Average shed 809.28 points, or 2.4%.
In April, the S&P 500 is down 7.8%, the Nasdaq has lost 12.2%, and the Dow has declined 4.2%.
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. Management warned on the conference call of another potentially weak quarter ahead. Shares fell more than 3% premarket.
Meanwhile, shares of Robinhood also shed about 3% 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.
“The stock market is re-rating some of the best-performing stocks of the past two years, especially in the technology sector, and investors should be warned that even the most lucrative companies are not immune from pullbacks and earnings compression,” Ryan Belanger, managing principal and founder of Claro Advisors, said.
Facebook parent Meta is set to report earnings Wednesday after the bell, with Apple and Amazon reporting earnings Thursday. Investors will be watching to see if tech companies’ results prove the intense selling in April has been misplaced.
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.