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US STOCKS-Wall St set to open lower as Amazon, Apple results weigh

reuters.com · 04/29/2022 09:09
US STOCKS-Wall St set to open lower as Amazon, Apple results weigh

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Amazon drops after results and outlook fall short

Apple falls after flagging supply problems

Monthly inflation surged by the most since 2005

Futures down: Dow 0.42%, S&P 0.98%, Nasdaq 1.30%

Adds comment; updates prices, details

By Bansari Mayur Kamdar and Devik Jain

- Wall Street was set to open lower on Friday as disappointing quarterly reports from Amazon and Apple pressured growth stocks, pushing the tech-heavy Nasdaq toward its worst month in two years.

Amazon.com Inc AMZN slumped 10.3% in premarket trading as higher costs hurt first-quarter results and the e-commerce giant issued a disappointing current-quarter forecast. nL3N2WQ4SI

Apple Inc AAPL, the world's most valuable company, fell 1.3% as downbeat outlook for demand overshadowed record profit and sales in the previous quarter. nL2N2WQ32E

Other megacap stocks such as Microsoft Corp MSFT, Meta Platforms FB, Alphabet Inc GOOGL declined between 0.3% and 1% after mixed earnings from the heavyweights this week.

The tech-heavy Nasdaq .IXIC was set for its worst monthly drop since March 2020 with a 9.5% drop despite some reprieve from Meta Platforms Inc's FB strong profit on Thursday.

"The fact that the stock market has come down already indicates that demand is slowing a little bit and further interest rate hikes will also slow demand," said Randy Frederick, managing director, trading and derivatives, at Schwab Center for Financial Research.

"As financing debt gets more and more expensive, which I expect it will this year, those companies that need to borrow and have to replace current debt with higher interest rate are going to continue to struggle."

Investors have dumped high-growth stocks this year on fears of rising interest rates denting future earnings. The Federal Reserve is set to meet next week with a 50-basis-point rate hike all but certain as inflation surges.

Data showed the personal consumption expenditures price index, the Fed's favored inflation measure, shot up 0.9% in March, the largest gain since 2005, after climbing 0.5% in February, further cementing the central bank's case for raising interest rates. nL2N2WQ2K0

The report also showed U.S. consumer spending increased more than expected in March amid strong demand for services.

Worries around an aggressive monetary policy, the Ukraine war and China's COVID lockdowns have fueled fears around slowing economic growth. Data on Thursday showed the U.S. economy unexpectedly contracted in the first quarter. nL2N2WP2ZV

At 09:01 a.m. ET, Dow e-minis 1YMcv1 were down 142 points, or 0.42%, S&P 500 e-minis EScv1 were down 42 points, or 0.98%, and Nasdaq 100 e-minis NQcv1 were down 174.5 points, or 1.3%.

The earnings season has been better than expected so far. Nearly half of the S&P 500 companies have reported through Thursday and 81% of them have topped Wall Street's expectations. Typically, only 66% beat estimates, according to Refinitiv data.

Chevron Corp CVX slipped 0.5% even as its first-quarter profit easily surpassed Wall Street's forecasts as oil and gas prices surged following Russia's invasion of Ukraine. nL2N2WQ356

Exxon Mobil Corp XOM dropped 0.6% as it took a $3.4 billion writedown due to its exit from Russia, but doubled its quarterly per-share profit. nL3N2WR23I

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Arun Koyyur)