Investing.com — U.S. stock futures are rising ahead of upcoming corporate earnings campaigns and the release of key U.S. growth numbers for the third quarter. Alphabet (NASDAQ:) stock is rising premarket, driven by better-than-expected cloud revenue and revenue growth.
In contrast, Advanced Micro Devices (NASDAQ:) stock fell after the company reported fourth-quarter earnings that were slightly below expectations.
1. Futures prices rise
U.S. stock futures are trending higher as investors analyze the earnings of big tech companies this week and evaluate a number of key economic indicators.
As of 4:30 p.m. ET (8:30 p.m. Japan time), the contract was up 38 points, or 0.1%, and the contract was up 13 points, or 0.2%. As for them, they advanced by 49 points (also 0.2%).
Wall Street’s major indexes were trading mixed in early trading, with traders adjusting their expectations for the Federal Reserve’s interest rate policy this year. These expectations for further cuts from the U.S. central bank were partially supported by a report showing job openings have fallen to their lowest level since 2021.
As of Tuesday’s close, the tech-heavy index hit a record high, with the benchmark index also rising, in contrast to the 30-stock index, which fell. Negotiations were influenced by Google-owned Alphabet Inc.’s financial results released after the market closed.
2. Alphabet’s results exceeded expectations
Alphabet on Tuesday reported third-quarter results that beat Wall Street expectations, thanks to strong demand for computing and data services needed to power artificial intelligence models that drive profitability for its cloud computing technology division. did.
Net income for the three months to September was $26.3 billion, up from $19.7 billion in the previous period and beating expectations of $22.8 billion. Groupwide sales also increased by 15% to $88.27 billion, beating expectations of $86.37 billion.
Revenue increased 35% to $11.4 billion, compared to $266 million in the year-ago period, and operating profit soared to $1.9 billion, primarily benefiting the Google Cloud division.
Advertising revenue also rose 10% to $65.85 billion, slowing the pace of growth slightly but strong enough to ease some concerns about increased competition from AI chatbots such as OpenAI’s ChatGPT. was maintained.
”[E]This has been an absolutely fantastic quarter. […]That said, investors are not too worried about short-term fundamentals,” Vital Knowledge analysts said in a note.[L]The main concerns are more medium- to long-term, such as regulatory oversight and competition for things like AI chatbots. ”
Alphabet shares rose in pre-market trading in the United States.
3. AMD stock drops before market open
Shares of Advanced Micro Devices (AMD) fell sharply in premarket trading after the company’s fourth-quarter revenue forecasts fell short of expectations, paring the more than 10% gains it had accumulated so far this year. Most of it was written off.
AMD also raised its sales forecast for its major AI chips next year to $5 billion from $4.5 billion. However, investors were disappointed with these predictions.
Increasing demand for artificial intelligence chips from many major technology companies is making it difficult for AMD to supply the required number of processors. The company’s CEO, Lisa Su, emphasized that the supply of artificial intelligence chips will be limited until 2025.
Morgan Stanley (NYSE:) analysts said in a note to clients that AMD’s earnings were “essentially in line” with consensus expectations and were “somewhat surprised” by the stock’s decline. he added.
“We continue to view 2024-2025 as the year of investment in AI opportunities, and believe some revenue and profit expectations remain too high,” the analyst noted.
4. Results announcement continues
Investors are bracing for a busy Wednesday as they have to analyze a large amount of company performance and important economic data.
Among the notable reports are those from Microsoft (NASDAQ:) and Facebook parent company Meta Platforms (NASDAQ:), expected to be released after Wall Street closes. Both companies are part of a select group of the “Magnificent Seven,” whose movements have indicated the direction of the market in recent months.
Similarly, Eli Lilly (NYSE:) is expected to release its numbers before the U.S. market opens, as is another major pharmaceutical company, AbbVie (NYSE:). Caterpillar (NYSE:), known for manufacturing construction equipment and considered an important indicator of the global economy, will also report its results.
On the economic front, traders will focus on data on US growth in the third quarter. The first estimate of gross domestic product (GDP) is expected to reflect an annualized rate of 3.0%, maintaining the same pace as in the April-June period.
This data could influence Americans’ perceptions of the economy, an issue of great importance to voters in the upcoming presidential election on Nov. 5. Polls show that the race between Democratic candidate Kamala Harris and Republican former President Donald Trump is extremely close.
5. Oil rise
Oil prices soared Wednesday, reversing some of their recent losses, following the release of industry data that revealed an alarming decline in U.S. crude inventories.
As of 4:30 ET, the contract was up 1.2% to a value of $71.58 per barrel. Meanwhile, (WTI) futures rose 1.3% to trade at $68.11 per barrel.
U.S. oil reserves fell by 570,000 barrels over the past week, compared to an expected increase of 2.3 million barrels, according to the American Petroleum Institute.
Official reservation data is expected to be released on Wednesday. If these match API values, it could indicate that supplies are relatively tight in the world’s largest fuel consumer.
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