Nasdaq tech stock futures fell more than 1% on Wednesday as disappointing results and warnings from Microsoft and Alphabet sparked losses among megacap companies and raised fears of slowing economic growth.
Microsoft Corp posted its lowest sales growth in five years and forecast second-quarter revenue below Wall Street estimates, while Alphabet reported downbeat ad sales and warned of a slowdown in advertising spending.
Shares of both companies fell around 6% each in premarket trading and weighed on Amazon.com and Apple, which are scheduled to report results later this week. They were down 3.7% and 0.9%, respectively.
Shares of Meta Platforms fell 3.9% and Pinterest 4.1% as they rely on ad revenue. U.S.-listed shares of Spotify Technology dropped 5.7%, as margins came under pressure from a slowdown in ad growth.
MacDailyNews Take: The most inflation- and recession-resistant big tech company is Apple, thanks to its superior customer demographics.
Apple iPhone customers are the most recession-proof smartphone buyers. — MacDailyNews, September 7, 2022
And the same goes for Mac, Apple Watch, and iPad customers.
Analysts’ consensus expects Apple to post earnings per share of $1.27 (vs. $1.24 YoY) on revenue of $88.90 billion, 6.60% growth YoY when the company reports fiscal Q422 earnings after the bell on Thursday, October 27th. As always, we’ll have the results for you right around 1:30pm PDT / 4:30pm EDT as soon as they are released (just check out home page at that time).
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Slowdown? Didn’t Joe just tell us how the economy is roaring?
I don’t recall anyone claiming the economy is roaring, nor would anyone expect it to given the geopolitical and supply chain headwinds that are outside anyone’s control. Biden did exaggerate that the USA has one of the fastest growing economies (it does, but not nearly as fast as population boom countries). That claim has been made by every prior US president at some point.
https://www.cnbc.com/2022/10/27/us-gdp-accelerated-at-2point6percent-pace-in-q3-better-than-expected-as-growth-turns-positive.html
Despite the fearmongering headlines and political posts to the contrary, 3Q 2022 had a positive growth rate that exceeds US population growth. That’s an impressive feat for an aging country in this global macroeconomic climate. Jobs data is good and with hope infrastructure renewal will expand the middle class for a long time. The much-detested inflation hasn’t squelched consumer spending.
Contrast this with disastrous Truss economics in the UK, now replaced by a Goldman Sachs prime minister. If you want to see what isolationism and trickledown gets you … see Exhibit UK. The usual posters here don’t talk about direct outcomes to their policies when they play out in front of their very eyes.
Correct policy: neither left nor right; FORWARD!
Adding context in advance of the anticipated personal insults…
Apple is a rare lighthouse in an increasingly stormy sea. No thanks to bad anti-trade public policy and horrific economic planning in certain countries claiming in their names to be United. It should not be surprising that even the strongest cash-rich companies are trending in the short term towards lower growth. The USA is in a far better economic position than the UK, however.
Liz Truss proposed a kind of modified Reaganomics—giving unfunded tax cuts to spur economic growth. Most economists thought this kind of spending would make inflation worse, and the markets responded.
“What she wound up causing was a massive implosion in the bond market. Because everyone said: You’re going to have to borrow this much money, you’re borrowing a lot already, and you’re going to have to borrow even more because you’re increasing the deficit through these tax cuts. Arithmetically, it just didn’t add up. But as far as Truss was concerned, we were in this post-arithmetic world where all you need is hope and conviction. She had that, then she resigned.”
– Felix Salmon, Axios financial correspondent
It would be nice for a 3rd party to arrive with a realistic fiscal policy, because the two existing ones don’t. The US is in the same viscious cycle as the UK, forcing each generation to pay larger and larger debts incurred by bipartisan deficit spending. But at least consumer spending (jobs) in the USA remains in good shape. One reason Apple continues to make money is that they have discovered how to make a luxury item a necessity. You no longer find anyone but antisocial hermits willing to live without mobile phones or personal computers … almost all made in China, Taiwan, or India. Should Sam dictate to US voters what candidates should be elected, then watch out. The USA, and Apple, could follow the trend taken by their poor cousins in the UK.