U.S. stock futures showed a mixed picture Thursday as investors digested a flurry of corporate earnings and awaited crucial economic data releases. This follows a challenging session on Wall Street, with the S&P 500 and Nasdaq Composite experiencing their worst declines since 2022.
Wednesday’s market downturn was primarily driven by disappointing quarterly reports from tech giants Alphabet and Tesla. This negative sentiment spilled over to other major tech stocks, including Nvidia and Microsoft.
Southwest Airlines reported a 46% drop in second-quarter profit, with shares falling 4% in premarket trading. The airline faces significant challenges:
Despite these headwinds, Southwest beat earnings expectations with adjusted EPS of $0.58 versus the anticipated $0.51.
American Airlines also struggled, forecasting a drop in unit revenue of up to 4.5% for Q3. Shares plummeted over 7% in premarket trading.
Ford Motor shares tumbled 13% after second-quarter earnings fell short of expectations. In contrast, Chipotle added 3% on strong earnings and increased restaurant traffic. IBM and ServiceNow also rose after beating expectations.
Honeywell shares dropped 4.5% due to weak third-quarter guidance, despite surpassing Q2 expectations.
While tech stocks struggled, the utilities sector emerged as a bright spot, gaining 1.16% on Wednesday. NextEra Energy, Eversource Energy, and Consolidated Edison led the sector’s gains.
Investors are closely watching upcoming releases of jobless claims data and preliminary second-quarter GDP figures, which could provide insights into the overall economic health and future market direction.
The short-term outlook remains cautious, with the market in a “show me” state regarding AI profitability and productivity. While some sectors like cruise lines and U.S. infrastructure show promise, tech giants may continue to face pressure. Investors should watch for potential sector rotations, monitor upcoming economic data, and pay close attention to individual stock performances as earnings season progresses.
E-mini S&P 500 Index futures are lower shortly before the cash market opening. The benchmark is currently on the weak side of the 50-day moving average at 5500.05, which is new resistance. The index is also straddling a 50% level at 5463.25.
Look for the bearish tone to continue on a sustained move under 5463.25. Selling pressure could actually intensify with a near-term target of 5205.50.
On the flipside, overcoming the 50-day MA at 5500.05 will be a sign of strength. This could trigger a powerful intraday short-covering rally into the close.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.