Here are the most important news, trends and analysis that investors need to start their trading day:
- Wall Street to open higher after Nasdaq's nearly 4% plunge
- Big earnings beats at Microsoft, big misses at Alphabet
- Boeing results stumble; GM reaffirms guidance
- $1 billion break-up fee goes both ways in Musk-Twitter saga
- Russia halts natural gas supplies to Poland, Bulgaria
1. Wall Street to open higher after Nasdaq's nearly 4% plunge
U.S. stock futures bounced Wednesday, getting a boost from Dow stock Microsoft's nearly 4% premarket jump following a better-than-expected quarterly earnings report after the closing bell Tuesday. However, Google parent Alphabet dropped roughly 4% in Wednesday's premarket, the morning after weak earnings. Facebook parent Meta Platforms and Ford are among the many companies releasing quarterly results after the closing bell Wednesday.
- Tech stocks led Wall Street sharply lower Tuesday. The Nasdaq lost nearly 4%, its biggest single-session loss since September 2020. It sank further into bear market territory, as defined by a drop of 20% or more from its most recent highs. Tesla tumbled 12% on concerns about CEO Elon Musk's deal to buy Twitter. Tesla shares were up modestly in the premarket.
- The Dow Jones Industrial Average on Tuesday fell 809 points, or 2.4%, right around a correction from its latest record close.
- The S&P 500 dropped 2.8%, falling further into correction territory, as defined by a decline of 10% or greater from recent highs.
- The benchmark 10-year Treasury yield ticked higher Wednesday but was below a recent high over 2.94%, a level not seen since late 2018.
2. Big earnings beats at Microsoft, big misses at Alphabet
Microsoft earned an adjusted $2.22 per share in its fiscal third quarter on an 18% year-over-year revenue jump to $49.36 billion. But it was the rosy guidance that really got the stock going higher in after-hours trading. Fiscal fourth-quarter revenue guidance for each of the company's three business segments — productivity, cloud and personal computing — surpassed the expectations of analysts surveyed by StreetAccount.
Alphabet's first-quarter misses were widespread, with earnings per share of $24.62 per share, overall revenue of $68.01 billion and advertising revenue for Google's YouTube of $6.87 billion. In a bright spot, so-called Other Bets, which include self-driving car unit Waymo, nearly doubled its revenue from a year ago to $440 million. However, the unit's loss widened slightly. Alphabet said its board authorized $70 billion in share repurchases.
3. Boeing results stumble; GM reaffirms guidance
Boeing on Wednesday reported a much wider adjusted loss and lower revenue than analysts had expected as the company faced higher costs on both commercial and defense aircraft. The Dow stock lost more than 4% in the premarket. Boeing has enjoyed a resurgence in demand for its 737 Max plane, which returned to service in late 2020 after two fatal crashes. But production problems and certification delays have hampered other aircraft programs.
General Motors late Tuesday reaffirmed its earnings expectations for 2022 despite reporting a lower first-quarter net profit and margin compared with a year ago on rising costs and supply chain instability. GM shares rose modestly in Wednesday's premarket. The automaker beat estimates with Q1 adjusted per share earnings of $2.09. However, GM missed with quarterly revenue of $35.98 billion.
4. $1 billion break-up fee goes both ways in Twitter saga
Musk could be required to pay Twitter a termination fee of $1 billion, under some circumstances, such as if the Tesla and SpaceX CEO fails to secure enough debt funding to complete his $44 billion deal to buy the social network, according to a new SEC filing. On the other hand, Twitter would owe Musk a $1 billion break-up fee should it fall through because it found a competing offer or if shareholders reject the deal, according to the same filing. Shares of Twitter fell roughly 1% in the premarket.
5. Russia halts natural gas supplies to Poland, Bulgaria
Russia's natural gas supplies to Eastern Europe are looking highly uncertain after the country's state-run Gazprom told Poland and Bulgaria that it would halt deliveries. The move comes after both countries refused Moscow's recent demand to pay for natural gas in rubles. It also coincides with a sharp rise in tensions between Western allies and Russia as the war in Ukraine continues into a third month. Gazprom said supplies would resume once the ruble payments were made.