Investing.com – U.S. stock futures edged higher ahead of the week’s final session, with earnings headlines from Google owner Alphabet (: ) and software giant Microsoft (NASDAQ: ) in focus. Investors are also bracing for the release of a new US inflation measure, which could influence the Federal Reserve’s monetary policy debate.
1. Futures are on the rise
Stock futures in New York rose on Friday as traders digest earnings reports from major technology companies and await the release of key US inflation data.
By 03:30 ET (0730 GMT), the Dow contract was up 48 points, or 0.1%, while S&P 500 futures were up 39 points, or 0.8%, and up 188 points, or 1. 1%.
The major indexes on Wall Street ended the previous session lower on the back of unexpectedly weak data on US economic growth in the first quarter. The data, coupled with signs of persistent inflation, has dampened hopes that the Federal Reserve will soon begin cutting interest rates this year.
Also dampening the mood were results from Facebook owner Meta Platforms* (NASDAQ: ), which noted that future earnings could be hurt by accelerating spending on its AI ambitions. The company’s shares fell more than 10% on Thursday, which in particular contributed to the decline in shares in the communications sector. Other segments, including healthcare, consumer staples and real estate, also declined.
2. Alphabet and Microsoft shares jumped
Alphabet shares soared in trading after the Google parent reported better-than-expected first-quarter earnings and announced its first-ever dividend payment of 20 cents per share.
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The California search giant’s revenue for the three months rose to $80.5 billion, up from $69.8 billion a year earlier and exceeded Wall Street forecasts of $78.7 billion, thanks in part to rising demand for AI services on the Azure cloud computing platform. Earnings per share of $1.89 beat the consensus estimate of $1.51.
Operating margin also increased from 25% to 32%, ahead of expectations. Analysts hailed the development as a sign that Alphabet is trying to rein in costs even as the company plans to spend more on developing its AI capabilities.
The nascent technology has also helped strengthen Microsoft rival Alphabet’s cloud division. The Seattle-based group, which pioneered the AI gold rush with a $13 billion investment in ChatGPT maker OpenAI, subsequently posted better-than-expected earnings and revenue, sending shares higher in after-hours trading.
Microsoft CFO Amy Hood also said capital spending will increase substantially to meet demand for generative AI offerings.
3. Snap’s earnings beat forecasts, sending shares soaring
Snap shares surged in over-the-counter trading on better-than-expected quarterly revenue and user data.
The Los Angeles-based social media group reported revenue for the first three months of the year of $1.2 billion, up 21% from the same period in 2023, largely due to improved advertising services. Analysts had expected revenue of $1.12 billion.
The number of daily active users of the Snapchat (NYSE:) app also increased to 422 million, above estimates of 419.6 million.
Snap, which has come under scrutiny after Meta’s disappointing results earlier in the week, also announced revenue guidance for the current quarter of $1.23 billion to $1.26 billion. Analysts had forecast revenue of $1.22 billion.
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4. PCE data
Economists are expecting mixed data on the March Personal Price Index (PCE), a measure of U.S. inflation that could influence how the Federal Reserve approaches a potential interest rate cut this year.
The overall rate is expected to remain unchanged at 0.3% month-on-month, while the annual rate is expected to accelerate slightly to 2.6% from 2.5% in February.
The so-called core PCE measure, which excludes volatile items such as food and fuel, is also expected to be at 0.3% for February’s monthly reading. On an annualized basis, it will be 2.6%, slowing down from the previous 2.8%.
Cooling inflation was one of the underlying principles of the Fed’s decision to raise borrowing costs to a more than 20-year high. Earlier this year, many thought policymakers would begin cutting rates soon, but stubborn price pressures and the continued strength of the U.S. economy have led many investors to back off. forecasts.
5. Oil has a positive week
Oil prices rose slightly in European trading on Friday and were set for a positive end to the week as traders anticipated possible supply cuts and ongoing geopolitical unrest in the Middle East.
However, the increase was marginal as the market remains on edge ahead of US inflation data due later today that could provide further signals on interest rate movements.
Crude oil futures were up 0.7% at $89.67 a barrel and crude oil futures were up 0.7% at $84.15 a barrel by 3:28 a.m. ET.
*Meta company is recognized as a terrorist organization in Russia and is banned
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