Nasdaq 100 futures weakened on Thursday as a lackluster outlook from Facebook-parent Meta Platforms Inc. raised concerns over sluggish earnings, while the possibility of the Federal Reserve hitting the brakes on aggressively hiking interest rates kept losses in check.
Nasdaq 100 futures were trading 0.09% lower, while shares in Meta dropped nearly 25% pre-market and were on track to lose $75 billion from its market value. The US tech giant reported a decline in its profit for the third quarter and provided a weak forecast for the holiday quarter.
Gloomy earnings and warnings by growth firms, including Microsoft Corp. and Alphabet Inc., have fueled worries about higher interest rates resulting in further deceleration of the economy, weighing on the S&P 500 and the Nasdaq to end a three-day winning streak on Wednesday.
On the other hand, futures tracking the blue-chip Dow edged higher on Thursday amid a few positive earnings reports.
US construction-equipment maker Caterpillar Inc. soared 6.1% after reporting an increase in its third-quarter profit, while fast-food giant McDonald’s Corp. Advanced 2.1% on surpassing quarterly comparable sales expectations.
Amazon.com Inc. and Apple Inc. are set to announce their earnings results for the third and fourth quarter, respectively, later in the day.
A Potentially Slow Earnings Season and Rate Hikes
Analysts have lowered their expectations for the third-quarter reporting season, with overall S&P 500 profit growth currently estimated at 2.3% year-over-year, compared with the previous forecast of 4.5% at the start of October.
Furthermore, lackluster reports and a set of data signaling a softening economy have strengthened the possibility that the Fed may decide to slow down on raising rates during its meeting in December.
The Bank of Canada (BoC) also increased its interest rates on Wednesday, although the hike was less than expected. Investors are now awaiting the European Central Bank’s (ECB) decision to be announced later in the day.
The US gross domestic product (GDP) data for the third quarter, which offers additional hints on the outlook for monetary policy tightening, climbed 0.6% for the first time after two straight quarters of contractions.
