Wall Street Set for Tech Boost as FAANGs Surge After Amazon, Microsoft Earnings

One Thing You Need to Know for Friday

  • This note from Jefferies pretty much sums up the investment case for Amazon. "Every major segment of the business is contributing, and we see big tailwinds coming behind some of the most meaningful segments inc. AWS, Prime, and the fast-growing advertising business. We continue to highlight the strategic importance of AWS to investors, which we think can cross $64Bn in annual revenue by 2022, becoming one of the largest enterprise software companies on the planet, and providing $350Bn+ of market value (vs. AMZN market cap of $735Bn today) over time. No change to our positive thesis - the dominance of higher-margin AWS continues to afford Amazon the luxury of investing significantly back into their core commerce business, creating a virtuous cycle for both Amazon and its investors." Via @BrianSozzi

Market Snapshot

U.S. stocks are expected to open mixed Friday, with a first quarter blowout from Amazon (AMZN) and stronger-than-expected results from Microsoft (MSFT) cementing the case for tech sector bullishness and rising oil prices and slowing growth signals keeping other markets on the defensive.

Both names are holdings in Jim Cramer's Action Alerts PLUS.

Futures contracts tied to the Nasdaq Composite were marked 16 points higher from last night's close, indicating a triple-digit opening bell gain with a record opening for Amazon, which gained more than 7% in pre-market trading after blasted first quarter earnings estimates that included top line sales passing $50 billion, leading the charge.

Microsoft shares were also indicated higher, rising 3.54% in pre-market trading after beating earnings estimates by 10 cents and forecasting soild near-term growth thanks to accelerating sales of its Azure cloud computing services and Office 365 software.

Other stocks in the so-called FAANG complex were also called higher, with Facebook Inc. (FB) rising 0.59% in pre-market trading, and Google parent Alphabet Inc. (GOOGL) and tech giant Apple Inc. (AAPL) each marked 0.35% to the upside. Netflix (NFLX) shares were seen 1.15% higher, indicating an opening bell price of $316.60 each. All three tech giants are holdings in Action Alerts PLUS.

Dow Jones Industrial Average futures , however, drifted 70 points lower, suggesting an opening bell decline of 31 points while S&P 500 futures were seen 3.5 points to the downside but still suggest modest opening bell gains for the broadest U.S benchmark.

Friday's earnings slate is relatively light, compared to the avalanche of reports that dominated the calendar for most of the week, but investors will still get first quarter update from oil majors Chevron (CVX) , ExxonMobil (XOM) and Phillips 66 (PSX) as well as consumers goods stalwart Colgate-Palmolive (CL) .

The session's biggest release, however, will come from the Commerce Department in the form of the Bureau of Economic Analysis' first estimate of first quarter GDP. Analysts expect U.S. economic growth slowed to 2% in the three months ending in March, but any upside surprise is likely to cement the case for faster rate hikes from the Federal Reserve and boost both Treasury bond yields and the dollar.

It will be a good day for Amazon CEO Jeff Bezos.
It will be a good day for Amazon CEO Jeff Bezos.

The dollar index, which benchmarks the greenback against a basket of six global currencies, traded at 91.81 overnight, near its 2018 high, after the euro slid to 1.2079 following dovish comments from European Central Bank President Mario Draghi after he and his colleagues made no changes to the region's interest rates and signalled no rush to the exit from the Bank's myriad stimulus policies.

The pound also fell sharply against the U.S. dollar immediately following the release of data showing the U.K. economy grew at the slowest pace in five years, tumbling 0.92% to 1.3788, the lowest since March 9, as investors extended bets that the Bank of England won't be able to raise its key interest rate when it meets next month in central London.

Overnight in Asia, stocks took their key from Wall Street's tech-led rush, with the region-wide MSCI Asia ex-Japan index rising 0.72% into the close of the session and Japan's Nikkei 225 hitting a two-month high in intraday trading before ending the day 0.66% higher at 22,467.87 points.

Sentiment was also supported by news that the leaders of North an South Korea agreed to pursue a "complete denuclearisation" of the peninsula after promising to move the decades-old truce between the two nations into a lasting peace agreement by the end of the year.

Global oil markets retreated modestly in overnight trading as the dollar surged and political tensions abated, with Brent crude contracts for June delivery falling 0.6% from Thursday's New York close to change hands at $74.4 and WTI contracts for the same month slipping 0.6% to $67.99.

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