|

Microsoft, Shopify fall after earnings, Texas Instruments sees better than expected revenue

Early earnings results may swing market, but Fed rate decision will drive Tuesday action.

Investors placed some last-minute markers on Tuesday as stocks fell ahead of Wednesday’s Federal Reserve decision on interest rates. U.S. Treasurys rose.

Markets pondered several significant earnings reports during the session, but the market force remains the Fed’s Federal Open Market Committee’s 2 p.m. rate announcement, which is expected to hike a key interest rate by three quarters of a point.

"High frequency economic indicators have deteriorated, both in the U.S. and elsewhere," Tiffany Wilding, a U.S. economist at bond giant PIMCO (ETR:ALV), wrote in a Tuesday note to clients. "Inflationary supply shocks have been more acute than originally expected, implying central banks may need to engineer recessions to restore price stability." Watch for the rate decision to arrive at 2 p.m. Wednesday, followed by a press conference by Federal Reserve Chairman Jerome Powell.

The S&P 500 fell 1.2%, 45.79 points, to 3921.05. The Nasdaq composite, which includes several of the largest tech companies, lost 220.09, or 1.9%, to close at 11562.57, and the Dow Jones Industrial Average shed 0.7% to finish at 31761.54.

Shares of Walmart fell 7.6% after it warned that higher food and gas prices are eating into consumers' broader household budgets.

Microsoft's earnings

Microsoft (NASDAQ: MSFT) shares fell in after hours trading when the company said its cloud business slowed more than expected, and a strong dollar reduced overseas results. The company also said video game sales slowed.

The company Tuesday said it earned $16.7 billion in its fiscal fourth quarter ended in June, less than analyst estimates of $17.3 billion. Revenue rose 12% from a year ago but also missed estimates.

Microsoft's fiscal fourth quarter video game sales fell 7%, after rising six percent in the previous quarter.

McDonald's (NYSE: MCD) said inflation is hitting its customers and that its sales fell despite higher prices.

McDonald'sChief Executive Chris Kempczinski said on Tuesday, "The operating environment across the competitive landscape remains challenging,"

Shopify's earnings

Shopify Inc (NYSE: SHOP) shares fell 15% after the company said it's cutting 1000 workers, or 10% of its staff, after overhiring earlier this year. That's a fate it shared with several other tech firms this year.

The shares have fallen more than 80% since they peaked in Nov. near $175, adjusting for a recent stock split. The company reports quarterly results on Wednesday.

And Texas Instruments (NASDAQ: TXN) said Tuesday that its second quarter revenue rose 14%. That's better than expected after an April company warning its revenue would be between $4.2 billion and $4.8 billion based on weak demand projections. Instead, it said revenue hit $5.2 billion in the quarter

Other earnings due Wednesday include Apple, Amazon, Mastercard, Pfizer and Merck.

Author

Jacob Wolinsky

Jacob Wolinsky is the founder of ValueWalk, a popular investment site. Prior to founding ValueWalk, Jacob worked as an equity analyst for value research firm and as a freelance writer. He lives in Passaic New Jersey with his wife and four children.

More from Jacob Wolinsky
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.

Crypto Today: Bitcoin, Ethereum, XRP pare gains despite increasing hopes of upcoming Fed rate cut

Bitcoin is steadying above $91,000 at the time of writing on Friday. Ethereum remains above $3,100, reflecting positive sentiment ahead of the Federal Reserve's (Fed) monetary policy meeting on December 10.

Week ahead – Rate cut or market shock? The Fed decides

Fed rate cut widely expected; dot plot and overall meeting rhetoric also matter. Risk appetite is supported by Fed rate cut expectations; cryptos show signs of life. RBA, BoC and SNB also meet; chances of surprises are relatively low.

Ripple faces persistent bear risks, shrugging off ETF inflows

Ripple is extending its decline for the second consecutive day, trading at $2.06 at the time of writing on Friday. Sentiment surrounding the cross-border remittance token continues to lag despite steady inflows into XRP spot ETFs.