US Futures Steady Ahead of Big Tech Reports, Fed Meeting

28 Apr 2021 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • US equities flat ahead of the opening, big tech reports after the bell
  • Fed meeting on focus as Jerome Powell will hold a press conference

US stock futures are trading flat in pre-market hours ahead of a busy day with big tech scheduled to report first-quarter earnings and a looming Fed interest rate decision. Investors are now in the most heated period of the earnings season where high-flying technology companies report to justify their lofty valuations.

Already, Tesla’s earnings beat expectations on Monday, even though company shares declined 4.5%, presumably on a lack of clear guidance about anticipated deliveries and vehicle production into the year. Google’s Alphabet and Microsoft also blew past analyst expectations with their corporate earnings reports revealed on Tuesday, after the bell. Google shares spiked 4.3% in the after-hours market, fueled by 34% revenue growth. Microsoft stock dipped roughly 3% in extended trading despite strong growth, beating analyst estimates. Microsoft recorded its strongest revenue growth since 2018.

Main US benchmark indexes hover near all-time highs in pre-market trading on Wednesday, following a quiet trading session on Tuesday. Yesterday, the Dow Jones Industrial Average ticked higher by only 3 points, while the S&P500 traded virtually flat, adjusting by less than 1 point to the downside. The tech-focused Nasdaq Composite declined 0.34%, or 48.56, to finish the session at 14,090 points.

Anticipation for Fed Chairman’s Comments

Reopening trades are still largely favored by investors who expect the economy to bounce back swiftly as states are gradually easing restrictions and businesses and consumers rev up the economy. On that note, later today, market participants will be looking to Federal Reserve Chairman Jerome Powell and his comments on the state of the economy. The Federal Reserve wraps up its two-day policy meeting with a press conference by Fed chief Jerome Powell.

The key focus will be on comments by Mr. Powell regarding the looming concerns over inflationary pressures and whether the Federal Reserve will keep its bond-buying program at the rate of $120bn per month. The central bank is expected to say it will maintain the current interest rate and continue to allow the economy to run hot as inflation creeps higher. The Fed Chairman has stated already the central bank could tolerate inflation “moderately” above the Fed’s target of 2%.

During previous speeches, Mr. Powell has acknowledged the US economy is at an “inflection point” and the Fed will remain committed to providing “as much help as needed” so that maximum employment and stable prices could be achieved.

Later today, after the closing bell, Apple and Facebook report financial results for the quarter ended March. Sales of iPad and wearables are expected to boost Apple’s earnings. In the previous quarter, sales of the iPhone ended up being the slowest-growing category, while the other four categories, Mac, iPad, wearables, and services, grew at double-digit percentages.

Facebook’s forecast for the first quarter of the year is largely uncertain after the social media giant posted record quarterly revenues for the holiday quarter of 2020. Growing competition from Apple has been a primary concern for Facebook’s CEO Mark Zuckerberg. Mr. Zuckerberg has warned that the upcoming privacy changes to the iOS 14 software pose a threat for its company. The update will allow iPhone users to opt-out of app tracking and advertisement targeting.

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