U.S. stock futures mixed after Meta shocker, as traders nervously await Apple and Amazon results

What’s driving markets

Big Tech was supposed to be the place that provided investors with some safety during an economic slowdown, but traders have learned that the high valuations these companies were afforded have made them very vulnerable to any indication of cyclical difficulties.

Need to Know: Why the rout for big tech companies may just be getting started

After Microsoft Corp.
MSFT
and Alphabet Inc.
GOOG
earnings disappointed late on Tuesday, Meta’s
META
attempted transformation to a metaverse platform was not well received by the market.

Shares in the company formerly know as Facebook were set to open Thursday’s session down 20%, trading just above $100 and near a 7-year trough.

Read: Analysts slash their ratings on Meta as costs balloon. ‘The bad news is you suck, the good news is you can only get better.’

It’s left investors nervously eyeing the earnings of Apple Inc.
AAPL
and Amazon.com Inc.
AMZN,
due after the close.

Read: Apple earnings: What do the iPhone production reports really mean?

“Realization has dawned that the might of big tech is not immune to the slowdown. Hopes that resilience would burn brightly through this U.S. earnings season have dimmed,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

However, Mark Newton, technical strategist at Fundstrat, saw the positive in the latest market action. “The important takeaway for all investors Wednesday focused on stock indices being able to rally sharply off the lows despite poor Tech earnings as rates followed through further to the downside,” he wrote in a note to clients.

“That’s an important point…it shows us all that markets are focusing more on interest rate changes (and should eventually focus on declining inflation) more than negative earnings,” Newton added.

The Federal Reserve is expected to raise its benchmark interest rate by 75 basis points to a range of 3.75% to 4% after its meeting next week, but recent soft U.S. economic data have built hopes that the central bank may decelerate its pace of tightening thereafter — a perception that has helped the S&P 500 index climb 7.1% through Wednesday off its 2022 low set two weeks ago.

U.S. economic updates set for release on Thursday include the first estimate of third-quarter GDP, weekly initial jobless benefit claims, and durable goods and capital equipment orders for September, all due at 8:30 a.m. Eastern Time.

The dollar hovered around parity with the euro
EURUSD.
The European Central Bank announced a widely expected interest-rate rise of 75 basis points to 1.5% as expected on Thursday. Investors will now wait for the press conference with President Christine Lagarde, due to begin at 8:45 a.m. Eastern.

Companies in focus

• Shares of Shopify Technology Inc.
  SHOP
  rose in premarket trade after the e-commerce company notched a smaller loss than anticipated and forecast that its operating-expense growth rate will fall sequentially in the current quarter.

• Comcast Corp.
  CMCSA
  shares rose 7% after the company added net new internet subscribers amid what’s been a tough recent backdrop for growth. The 10,000 net subscriber gains in its residential broadband business and 5,000 net gains in its business broadband business came after Comcast posted a net of no new internet subscribers in aggregate during the second quarter.

• Shares of Dow component Caterpillar Inc.
  CAT
  rose over 3% after the construction and mining equipment maker topped estimates for the third quarter.

• McDonald’s Corp.
  MCD
  shares were on the rise after the fast-food giant and Dow component blew past estimates for the third quarter.

• Shares of Keurig Dr. Pepper Inc.
  KDP
  fell after the company’s third-quarter earnings fell sharply from the year earlier as inflationary pressures weighed.

Barbara Kollmeyer contributed to this report.