Wall Street Waves Over Big Tech Earnings

U.S. stock markets were seen on Monday as investors continued to digest first-quarter earnings from some of the world’s biggest companies, with updates from the likes of Microsoft and Google parent Alphabet.

Wall Street’s benchmark S&P 500 rose 0.1 percent, while the tech-heavy Nasdaq Composite ended 0.3 percent lower.

Morgan Stanley’s U.S. equities team noted that while stocks have generally performed well in the current earnings season, they are at risk if investors begin to focus on a more cautious outlook from executives.

“For our more tactically oriented clients, we think our pessimistic outlook for earnings this year, particularly as liquidity remains less accommodative, poses short-term risk to share prices this dynamic,” they wrote in a note to clients.

Coca-Cola shares fell 0.2 percent after the beverage group posted 5 percent net revenue growth in the first quarter.

The latest earnings from Microsoft, Alphabet and Amazon will draw investors’ attention this week. Big Tech is doing well even as U.S. interest rates continue to climb — a drag on the broader market. Microsoft is up 18 percent for the year, while Amazon is up 29 percent. The S&P 500 has added more than 7 percent so far.

Bed Bath & Beyond fell 39 percent to 18 cents a share after the home products group filed for Chapter 11 bankruptcy protection on Sunday.

U.S. government debt rose on Monday, with the yield on interest-rate-sensitive two-year Treasuries down 0.04 percentage points to 4.14 percent and the yield on the benchmark 10-year note down 0.06 percentage points to 3.51 percent.

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Strategists at BMO noted that more than half of the blocks are at recent averages. Moves will be muted ahead of a closer look at first-quarter gross domestic product figures due on Thursday and inflation data on Friday.

The Federal Reserve meets next week to decide interest rates. While the quarter-point hike was largely priced in, investors are looking beyond that to the possibility of a rate cut later in the year.

An index measuring the dollar’s strength against a basket of six major currencies fell 0.3 percent.

Hong Kong’s Hang Seng index fell 0.6 percent and the Hang Seng Tech index edged up 0.2 percent, although China-related stocks started the week on the back foot despite trading 1.1 percent lower in the previous session.

A report from Bloomberg last week suggested that US President Joe Biden is prepared to further restrict the ability of US companies to invest in key areas of China’s economy – which would reignite concerns about the effect of ongoing geopolitical tensions between the two countries.

China’s CSI 300 fell 1.2 percent, dragged down by basic goods, property and non-consumer cycles.

Europe’s regional Stoxx 600 and London’s FTSE 100 both fell less than 0.1 percent. The moves came as Credit Suisse announced it had experienced asset outflows of SFr61.2bn ($68.6bn) in the first quarter. Shares in UBS, which agreed to take over Credit Suisse last month, rose 0.8 percent.

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