Investing.com – U.S. stock futures fell on Thursday as the market focused on the company’s results and upcoming data from other blue-chip tech groups. IBM will report mixed first-quarter earnings and an announcement that it will acquire the company in a $6.4 billion deal. The U.S. economy is also expected to slow in the first three months of 2024 but remain resilient in a high interest rate environment and persistent inflation pressures .
1. Futures are down
Stock futures in New York fell on Thursday as investors weighed earnings from big-name tech companies and awaited new data on U.S. economic growth.
By 03:30 ET (0730 GMT), the Dow contract was down 95 points, or 0.2%, while S&P 500 futures were down 34 points, or 0.7%, and down 211 points, or by 1.2%.
The major indexes on Wall Street recorded a mixed close in the previous session after choppy trading, with the benchmark S&P 500 up 0.02% and the tech-heavy index up 0.1%. The index fell 0.1%.
Along with Meta Platforms’ results (below) released after the close on Wednesday, traders will likely be immersed in quarterly data from software giant Microsoft (NASDAQ:) and Google parent Alphabet (NASDAQ:) a little later Today. Thursday’s focus will also be on first-quarter U.S. GDP data, which could provide some insight into the health of the world’s largest economy and potentially influence how the Federal Reserve approaches future monetary policy decisions.
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2. Meta shares fall: CEO Mark Zuckerberg lays out AI spending plans
Meta Platforms shares fell more than 15% in U.S. trading, erasing billions of dollars in market value even as the social media group posted better-than-expected revenue for the first three months of 2024.
Meta, whose family of apps also includes Instagram and WhatsApp, raised its annual capital spending forecast to $40 billion from $37 billion, citing a desire to accelerate the expansion of artificial intelligence capabilities. Meta spent $28.1 billion last year.
In a call with analysts, Chief Executive Mark Zuckerberg, who has previously supported tough cost-cutting measures for much of 2023, said increased investment is needed to help Meta become the world’s leading AI company.
“This leads to a slight downgrade to revenue guidance,” Goldman Sachs (NYSE:) analysts wrote in a note to clients.
AI spending will also be in focus after the close on Thursday when other companies like Meta Microsoft and Alphabet report their latest reports.
3. IBM shares fall after mixed earnings and HashiCorp deal announcement
International Business Machines (NYSE:) reported mixed first-quarter results and announced it has reached an agreement to acquire cloud software provider Hashicorp (NASDAQ:) for $6.4 billion.
The technology group’s earnings per share (EPS) were $1.68, beating the consensus estimate of $1.58. However, revenue for the quarter was slightly below expectations at $14.46 billion, missing estimates of $14.51 billion.
Meanwhile, IBM also said it would buy HashiCorp for $35 a share in cash as the company seeks to take advantage of the boom in demand for cloud software products driven by AI. The acquisition price represents a 42.6% premium to HashiCorp’s closing stock price on Monday.
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IBM shares fell in after-hours trading.
4. US economic growth will slow in the first quarter
U.S. economic activity is expected to slow in the first quarter but remain strong, driven by a largely resilient labor market and consumer spending.
GDP figures released by the Commerce Department slowed from 3.4% in the fourth quarter to 2.5% in the first three months of the year, suggesting the U.S. remains more resilient than other advanced economies despite a period of stagnant inflation. and higher interest rates.
Economists said U.S. consumers cut mortgage payments and businesses locked down refinanced debt ahead of the tightening cycle, helping them protect against rate hikes, according to Reuters. Firms fearful of losing workers following periods of labor shortages before and after the COVID-19 pandemic are also hesitant to let employees go.
The GDP data will precede Friday’s release of the personal consumption expenditures index excluding food and fuel, a measure closely watched by Federal Reserve officials. Signs of a strengthening economy and continued price pressure could weigh on expectations that the Fed may decide to hold off on cutting rates from more than 20-year highs until later this year.
5. Oil prices have risen
Oil prices rose slightly in European trading on Thursday as traders digested mixed data on US crude inventories and geopolitical tensions in the Middle East.
June futures rose 0.2% to $88.16 a barrel, and June futures rose 0.1% to $82.92 a barrel by 3:29 a.m. ET.
Official data on U.S. oil inventories showed on Wednesday that inventories fell by 6.4 million barrels in the week ended April 19, largely defying forecasts for a 1.6 million barrel rise. However, distillate inventories unexpectedly rose by 1.6 million barrels, while gasoline inventories fell less than expected by 0.6 million barrels.
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Hopes remain that recent hostilities between Iran and Israel will not escalate into all-out war. Although the two countries have launched strikes at each other over the past two weeks, neither side has signaled it wants the violence to escalate further.
Some traders subsequently lowered expectations that rising geopolitical tensions in the Middle East would disrupt oil supplies from the oil-rich region.
*Meta company is recognized as a terrorist organization in Russia and is banned
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