Traders gather on the floor of the New York Stock Exchange on August 4, 2022.
Source: New York Stock Exchange
S&P 500 futures rose on Friday as tech giants Alphabet and Microsoft rallied on strong earnings results.
Futures tracking the broad market index rose 0.7%, while Nasdaq 100 futures rose 1.02%. Dow Jones Industrial Average futures rose 62 points, or 0.16%.
Alphabet shares rose nearly 12% in after-hours trading after the company reported better-than-expected first-quarter profits. The company also approved its first-ever dividend and $70 billion in stock buybacks.
Microsoft shares rose 4% after the software maker reported third-quarter results that beat Wall Street expectations.
The strength of these mega-cap stocks could lift major averages after a losing day on Wall Street. On Thursday, the blue-chip Dow Jones Industrial Average fell 375 points, while the S&P 500 and Nasdaq Composite fell 0.5% and 0.6%, respectively.
Thursday's selloff was prompted by new U.S. economic data showing a sharp slowdown in growth and persistent inflation. Gross domestic product (GDP) expanded 1.6% in the first quarter, compared to the Dow Jones forecast of 2.4%.
In addition, the personal consumption expenditure price index increased at a pace of 3.4% during the period, significantly exceeding the 1.8% increase in the previous quarter. The PCE price index is the Federal Reserve's recommended inflation measure. The report prompted further price changes in the futures market, with traders now predicting just one rate cut in September this year.
“The Fed will be more concerned about inflation being above target in the first quarter than it is about slowing growth,” said Bill Adams, chief economist at Comerica Bank. “The Fed is likely to slow the pace of balance sheet outflows at some point in its next few meetings, but it will likely wait until September to begin cutting rates.”
Still, the major averages are on track for a winning week. The S&P 500 is up 1.6% since the start of the week, on pace to end a three-week losing streak. The Nasdaq rose more than 2%, heading for its first positive week in five weeks. The Dow Jones Industrial Average rose only 0.3% this week.
So far, about 38% of S&P 500 companies have reported quarterly results, and nearly 80% of them have exceeded earnings estimates.
Investors are waiting for further earnings from energy giants Chevron and ExxonMobil on Friday before the bell.
In terms of economic indicators, March PCE statistics will also be released on Friday morning. The report forecasts inflation to remain at 2.6% on a 12-month basis, or 2.7% excluding food and energy.
