Stock futures fell on Tuesday as investors looked to big tech profits for more clues about the health of the US economy.
Futures related to the Dow Jones Industrial Average fell 187 points, or 0.6%. S&P 500 futures were down 0.4%, while Nasdaq 100 futures were down 0.2%.
Amazon shares fell slightly in pre-market trading due to reports of a hiring freeze. JetBlue and Xerox were among the stocks that fell before the bell after reporting earnings that did not beat expectations. Coca-Cola and General Motors were among those that jumped in with better-than-expected reports.
Tuesday’s moves came after another strong day for stocks.
The Dow rose 417.06 points, or 1.3%, on Monday. The Nasdaq Composite finished 0.9% higher, and the S&P 500 added nearly 1.2%, as nine of the 11 sectors ended higher, led by Healthcare.
“The market has gotten used to real price volatility, and is almost less sensitive to it,” said Jeff O’Connor, head of market structure in the Americas for Liquidnet. “And wild movements make trading conditions more difficult.”
This week, investors are still focused on the earnings of the largest technology companies, with reports from Alphabet and Microsoft due on Tuesday. Meta Platforms reports on Wednesday, followed by Amazon and Apple on Thursday. Due to its sheer size and market capitalization, any moves are likely to drive the market forward.
So far this season, companies have proven that they may be doing better than expected. This is partly due to the fact that analyst earnings estimates have fallen in recent months as companies have faced foreign currency headwinds and other growth concerns. This could lead to a stock rally when results may be better than concerns.
“Earnings have already fallen somewhat,” said Sam Stovall, chief investment analyst at CFRA. “Investors may be happy that it is up 2%, not 2%, but we are also seeing cuts to the 2023 outlook. Perhaps this bear market will have to play its part even if we get a market rally in the near term.”
UPS, GE and Coca-Cola reported earnings prior to Tuesday. Chipotle Mexican Grill and Texas Instruments will release a report after Tuesday’s close.
On the economic data front, August S&P/Case-Shiller house prices, August FHFA house prices and October consumer confidence are due on Tuesday.
