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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.
"The results of the big technology firms were seen as a key
determining factor in market sentiment going into the U.S. third
quarter reporting season and both Microsoft and Alphabet have
given investors reason to worry," said Laith Khalaf, head of
investment analysis at AJ Bell.
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.
The extensive weakness in the tech sector comes despite a drop
in the benchmark 10-year Treasury yield, which fell for the
second straight day on rising bets over a slowdown in the pace
of interest-rate hikes. [US/]
Expectations of a less-hawkish Federal Reserve have helped Wall
Street's main indexes notch three straight sessions of gains,
but downbeat earnings and forecasts suggested that the Fed's
rapid interest rate hikes are slowing the economy.
The U.S. central bank is expected to deliver its fourth 75
basis-point hike in its Nov. 1-2 policy meeting against the
backdrop of recent data pointing to economic softness.
Analysts have set the bar low for third-quarter reporting
season, with aggregate S&P 500 earnings growth seen at 3.3%
year-on-year, down from 4.5% at the start of the month,
according to Refinitiv data.
At 6:36 a.m. ET, Dow e-minis were down 37 points, or 0.12%, S&P
500 e-minis were down 27 points, or 0.7%, and Nasdaq 100 e-minis
were down 186 points, or 1.59%.
A bright spot was Visa Inc, whose shares rose 1.3% after the
payments processor topped quarterly profit estimates on strong
travel demand.
(Reporting by Amruta Khandekar and Shreyashi Sanyal in Bengaluru;
Editing by Saumyadeb Chakrabarty and Arun Koyyur)
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