January 25, 2023

US Stocks Lower Amid Microsoft, Boeing Earnings & Google Antitrust Suit

U.S. stocks were trading lower Wednesday, with Microsoft Corporation (NASDAQ:MSFT) and Boeing Co (NYSE:BA) leading the charge, after both companies reported less than stellar results and outlooks for the quarter and the year.[0] Microsoft shares lost nearly 3%, while Boeing was down over 2% in pre-market trading.

Microsoft (MSFT) shares fell 1.3% premarket after reporting its slowest sales growth in more than six years, with revenue of $52.75 billion, below the consensus of $52.93 billion. The company also forecasted that Q3 sales in its Azure cloud-computing business will slow by 4 or 5 points from the end of Q2.[1] Following Microsoft’s earnings report, Guggenheim analyst John DiFucci issued a sell rating on Microsoft, the first since three years ago.[2] Analysts on average expect Azure sales to increase 34% this year and then slow to 27% next year.[3]

Boeing (BA) was also another major company whose earnings disappointed, and premarket investors apparently saw that combination as a bit too much for a market that was already pulling back yesterday from its January rally.[4] Boeing reported a surprise fourth-quarter loss attributed mostly to production delays with its 777-9.[0] BA shares were down more than -2% in pre-market trading after reporting Q4 revenue of $19.98 billion, weaker than the consensus of $20.01 billion.

The Justice Department is also set to sue Google (GOOG) as soon as Tuesday, regarding the search giant’s dominance over the digital advertising market.[5]

International markets are showing varied results.[1] The Euro Stoxx 50 index decreased by 0.73%, while Japan’s Nikkei Stock index finished with an increase of 0.35%.[1] At the end of Wednesday’s trading session, stocks in the Asia-Pacific region finished with mixed results. The Japan Nikkei 225 index increased for the fifth consecutive day.[6] After the Lunar New Year holidays, the markets in South Korea and Singapore saw a notable increase, as they sought to compensate for the advances made in other markets in the region.[6]

As investors await more earnings reports and news from the Justice Department, stock futures dropped in early trading on Wednesday, while fixed income markets bounced, hinting at a cautious trading day.[7]

0. “Nasdaq set to lead market lower after Microsoft forecasts softer demand” MarketWatch, 25 Jan. 2023, https://www.marketwatch.com/story/nasdaq-set-to-lead-market-lower-after-microsoft-forecasts-softer-demand-11674640349

1. “Markets Today: Stock Indexes Fall as Microsoft Warns of Weaker Revenue Growth” Barchart, 25 Jan. 2023, https://www.barchart.com/story/news/13586195/markets-today-stock-indexes-fall-as-microsoft-warns-of-weaker-revenue-growth

2. “Microsoft Investors Worried Recession Could Deliver Big Hit” TheWrap, 24 Jan. 2023, https://www.thewrap.com/microsoft-investors-recession-hit-cloud-business-slows

3. “Microsoft’s Stock-Market Halo Fades as Recession Doubts Creep In” Yahoo! Voices, 24 Jan. 2023, https://www.yahoo.com/now/microsoft-stock-market-halo-fades-111126627.html

4. “Clouds Gather: Stocks Sag After Microsoft Takes a Hit…” The Ticker Tape, 25 Jan. 2023, https://tickertape.tdameritrade.com/market-news/clouds-gather-stocks-sag-after-microsoft-takes-a-hit-on-guidance-and-boeing-s-earnings-lose-altitude-19373

5. “North American Morning Briefing: Microsoft Warning Dents Mood” Morningstar, 25 Jan. 2023, https://www.morningstar.com/news/dow-jones/202301252762/north-american-morning-briefing-microsoft-warning-dents-mood

6. “Nasdaq Futures Slump As Microsoft’s Outlook Dampens Tech Recovery Hopes — Analyst Warns Of More Bumpiness” Benzinga, 25 Jan. 2023, https://www.benzinga.com/news/earnings/23/01/30563847/nasdaq-futures-slump-as-microsofts-outlook-dampens-tech-recovery-expectations-analyst-warns-of-more

7. “Dow drops 400 points, Nasdaq sheds 2% after Microsoft’s dismal guidance” CNBC, 25 Jan. 2023, https://www.cnbc.com/2023/01/24/stock-market-news-live-updates-futures-open-to-close.html

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