US stock futures were mixed on Wednesday, with the Nasdaq rising as Alphabet’s (GOOG, GOOGL) strong earnings boosted optimism for Big Tech results ahead of crucial GDP and labor market data.
Contracts on the tech-heavy Nasdaq 100 (NQ=F) edged up roughly 0.2%, while S&P 500 futures (ES=F) hugged the flat line on the heels of a winning day for both. Dow Jones Industrial Average futures (YM=F) slid 0.2% as a fresh batch of earnings rolled in.
Tech megacaps are in the spotlight after Alphabet’s quarterly results showed its high-spending push into AI is starting to pay off. Shares of the Google parent jumped almost 6% in premarket, alongside smaller gains for Amazon (AMZN), Meta (META), and Microsoft (MSFT).
The wait is on for after-hours earnings from Meta and Microsoft, next up in the five-strong parade of “Magnificent Seven” reports this week. For the stock rally, a lot is riding on how Big Tech earnings fare — which will be paramount even amid a packed two weeks of data and other market-moving news, according to analysts.
Eyes will be on updated readings on third quarter GDP and ADP private payrolls due later for signs of a slowing economy, after job openings fell to their lowest level in almost four years. Signs of further cooling in the labor market are expected to influence the Federal Reserve’s next interest rate decision on Nov. 7.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Meanwhile, earnings continue to reset the mood in a consequential week for markets. Eli Lilly (LLY) and Caterpillar (CAT) are the early morning highlights, while Starbucks (SBUX) and Robinhood (HOOD) are on the after-hours roster.
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Google parent’s stock surges on strong earnings fueled by AI
Shares of Google parent Alphabet (GOOG, GOOGL) jumped 7% premarket Wednesday after the company reported earnings that beat Wall Street’s expectations.
Here’s a look at how its performance compared to forecasts, according to Bloomberg consensus estimates:
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Adjusted earnings per share of $2.12 vs. $1.83 expected
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Revenue of $88.27 billion vs. $86.44 expected
Google’s better than expected growth was all thanks to AI. Quarterly sales within the company’s robust Cloud unit, for example, grew 35% to $11.4 billion, Yahoo Finance’s Hamza Shaban reports.
“This business has real momentum, and the overall opportunity is increasing as customers embrace gen. AI,” Google CEO Sundar Pichai said in a call with investors Tuesday evening.
Jefferies analyst Brent Thill wrote on Wednesday: “AI feels increasingly like a well-managed tailwind, improving effectiveness of ads, drawing in Cloud customers, and driving internal efficiencies.”
In notes to investors with titles like “Gem of a Quarter,” “Ice in its veins,” and “Come At The Search King,” Wall Street analysts raised their price targets and earnings outlooks for Google, with bullish Thill seeing shares rise as high as $235. On average, analysts forecast shares rising to about $209 over the next 12 months, according to Bloomberg consensus estimates.
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Private payroll additions surprise Wall Street in October
The latest data from ADP out Wednesday showed the private sector added 233,000 jobs in October, above economists’ estimates for 111,000 and significantly higher than the 159,000 seen in September.
September’s number of job additions was revised up from a prior reading of 143,000.
“Even amid hurricane recovery, job growth was strong in October,” ADP chief economist Nela Richardson said in a release. “As we round out the year, hiring in the U.S. is proving to be robust and broadly resilient”
