Microsoft, Facebook, Amazon and PayPal - 5 Things You Must Know

Here are five things you must know for Thursday, Feb. 1:

1. -- Stocks Mixed Ahead of Earnings From Apple, Alphabet, Amazon

U.S. stock futures were mixed on Thursday, Feb. 1, ahead of earnings from Apple Inc. ( AAPL) , Alphabet Inc. ( GOOGL)  and Inc. ( AMZN) , and amid a new set of questions from investors on the pace of inflation in the world's biggest economy and its ultimate impact on interest rates and the broader bull market.

Futures contracts tied to the Dow Jones Industrial Average fell 29 points, while those tied to the S&P 500 gained 2 points. 

Stocks finished higher on Wednesday, Jan. 31, getting a lift from Boeing Co. (BA)  , but wavered in and out of positive territory during the afternoon after the Federal Reserve decided not to raise interest rates.

The U.S. central bank held benchmark U.S. interest rates steady at its first meeting of the year, saying that labor markets continue to strengthen amid "solid" economic activity. The meeting was Chair Janet Yellen's last before she turns over leadership of the Fed to Jerome Powell, President Donald Trump's appointee as her replacement.

A statement from the Fed did little to change expectations for its rate-hiking trajectory, said Charlie Ripley, senior investment strategist at money manager Allianz Investment Management, which expects the Fed to raise its target rate three times this year. Based on market indicators, most traders and investors also expect three hikes in 2018, following three increases last year.

DowDuPont Inc. (DWDP) shares slipped 0.8% in premarket trading after the company posted an earnings and revenue beat in the fourth quarter.

Alibaba Group Holding Ltd. (BABA) posted adjusted earnings in its fiscal third quarter of $1.63 a share, 4 cents below estimates. The stock fell 3.5%.

Earnings are also expected Thursday from Mastercard Inc. (MA)  and Visa Inc. (V)  . 

The economic calendar in the U.S. on Thursday includes weekly Jobless Claims at 8:30 a.m. ET, and the ISM Manufacturing Index for January at 10 a.m.

Apple, Alphabet and DowDuPont are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells the stocks? Learn more now.

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2. -- Microsoft Gets Lift From the Cloud

Cloud computing lifted Microsoft Corp.  ( MSFT) to a fiscal second-quarter earnings beat but the stock turned lower, down 0.8%, in premarket trading on Thursday.

Adjusted earnings in the quarter were 96 cents a share, well above forecasts of 87 cents. Revenues increase 12% to $28.9 billion, topping expectations of $28.4 billion.

CEO Satya Nadella said that Microsoft's investments in the Internet of Things, artificial intelligence and other areas would accelerate growth in the future.

Azure revenue grew 98% in the quarter, though Microsoft does not break out revenue for the cloud computing unit. Azure helped drive a 56% increase in Microsoft's commercial cloud revenue, which came to $5.5 billion in the quarter.

"It all comes down to really having an architectural advantage on what is a new secular trend," Nadella said of the development in cloud and related applications and services during a conference call on Wednesday. 

"Microsoft delivered a strong quarter, bolstering our conviction in the name and in our view, thanks to the stellar Azure revenue growth, backing our thesis that Microsoft is the No. 1 threat to Amazon's AWS dominance in the public cloud space," said Jim Cramer and the Action Alerts Plus team, which holds the stock in the Action Alerts PLUS Charitable Trust Portfolio.

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3. -- Facebook Users Spend Less Time on the Site

Shares of Facebook Inc. ( FB)  rose 2.1% in premarket trading on Thursday after the social networking giant beat fourth-quarter earnings and revenue estimates but said users were spending less time on the site.
CEO Mark Zuckerberg noted that "2017 was a strong year for Facebook, but it was also a hard one" and said the company wanted to focus on making its network good for "people's well-being and for society" by prioritizing connections between people rather over passive consumption of content.
Zuckerberg said that fourth-quarter news feed algorithm changes that reduced the number of viral videos shown to users lowered time spent on Facebook by roughly 50 million hours a day. On an earnings call, the CEO added that this decline was equal to 5% of time spent.

Facebook earned $1.44 a share in the fourth quarter, but the company took a one-time tax hit of 77 cents a share in the period from new tax law changes. Adjusted profit was $2.21 a share, which topped forecasts.

Facebook reported 1.4 billion daily active users in the quarter, which fell slightly short of consensus estimates. North American daily active users fell by 1 million sequentially to 184 million, albeit while growing by 4 million annually.

Facebook's ad revenue growth of 48% in the quarter nearly matched the third quarter's 49% and easily forecasts.

"We viewed this as another excellent quarter for Facebook and the results are truly a testament to the management team," said Jim Cramer and the Action Alerts Plus team. "In an ever-changing world, management has done an excellent job in evolving and adopting the platform to meet the consumer demands." 

Facebook is a holding in Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells FB? Learn more now.

4. -- eBay Dumps PayPal  

PayPal Holdings Inc. (PYPL) shares plunged 8.6% in premarket trading on Thursday, while eBay Inc. (EBAY)  jumped 11% after the online marketplace said it wouldn't extend an agreement with PayPal as it looks to develop a new partnership with Dutch provider Adyen BV.

EBay posted stronger-than-expected fourth-quarter revenue of $9.1 billion, thanks to a 9.7% increase in overall merchandise sales of $24.43 billion over the three-month period, but booked a loss of $2.6 billion, or $2.51 a share, as it revalued tax credits in the wake of the new U.S. tax law. It also said that it had signed an agreement with Adyen, and while it would keep PayPal as an option for customers in the short-term its current agreement "has not been extended and will not be extended."

PayPal CEO Dan Schulman said the decision was "manageable" for his company, which was spun out of eBay in 2015, and forecast first-quarter earnings of between 52 cents and 54 cents on revenue of around $15.15 billion. Both figures were largely in line with current analysts' forecasts.

J.D. Power and LMC Automotive predicted that sales in January would be down about 3% from a year earlier.

This article has been updated to include additional earnings information.

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