Futures tied to Wall Street’s key benchmarks were mixed heading into overnight trading Wednesday after stocks closed higher for the fourth straight day on the heels of Big Tech earnings.
However, the winning streak in equities was eclipsed by disappointing fourth quarter results from Facebook parent company Meta (FB), which reported figures that missed estimates after the bell on Wednesday. The results sent shares tumbling more than 20% in post-market trading. Contracts on the tech-focused Nasdaq Composite dropped 1.68% following results, while S&P 500 and Dow Jones Industrial Average futures were muted.
Meta reported Q1 2022 revenue, a key figure for stock watchers, that came up short, with the company estimating between $27 billion to $29 billion in the current quarter, below analysts’ expectations of $30.25 billion. The company’s ability to continue to navigate Apple’s (AAPL) recent privacy changes that allow iOS users to opt out of letting their apps track them across the web was also in focus for the near term.
Facebook’s fourth-quarter report comes amid a prolific week in earnings season. Amazon (AMZN) is set to unveil figures after market close on Thursday, marking the last of five corporate heavyweights that account for about one-quarter of the S&P 500’s total market capitalization to reveal 2021 year-end performance figures. Shares of Alphabet (GOOGL), which released its results on Tuesday, surged in Wednesday’s session after the tech giant topped quarterly sales and profit estimates and announced a 20-for-1 stock split.
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Investors weighed Big Tech earnings against a jarring employment report out Wednesday. ADP reported that private-sector U.S. employers cut 301,000 jobs in January, marking the first decline since December 2020 as the Omicron variant put a dent in the labor market’s recovery.
“The takeaway for investors is probably a temporary blip on an otherwise strong recovery we’re seeing in the employment markets,” SEI CIO Jim Smigiel told Yahoo Finance Live. “It’s not too surprising we’re seeing a bit of weakness.”
ADP’s report was a prelude to the Labor Department’s official monthly jobs report due out Friday. Consensus economists expect 150,000 non-farm payrolls returned in January, a figure that would mark the slowest pace of hiring since December 2020 as the impact of the latest COVID waves catches up to economic data.
“It’s one of those things where we’re just going to have to get used to the short but shallow economic damage we saw because of the latest variant,” Art Hogan, B Riley-National chief market strategist, told Yahoo Finance Live.
Jared Bernstein, member of the White House Council of Economic Advisers, emphasized to Yahoo Finance Live that this month’s figures are likely to be “distorted” by a number of Americans who have tested positive for the virus in the latest surge on unpaid leave that are not tracked on the payroll count.
Anxiety around central banking policies rattled markets in January. The S&P 500 posted a negative return of 5.26% for January 2022 – marking its worst month since the benchmark plunged 12.5% in March 2020 after COVID-19 upended the global economy. Meanwhile, the Nasdaq Composite (^IXIC) narrowly avoided its worst-performing January on record after a loss of 8.98% for the month.
As stocks appear to crawl out of their January rout, some strategists contend the worst of Fed jitters could be behind us.
“In some ways, we might be at peak hawkishness in terms of market expectations,” Tony DeSpirito, CIO of BlackRock’s U.S. Fundamental Active Equity arm. “We certainly saw that in January, and late last year — a change in tone from the Fed and now the market has reset expectations and starting to price them in.”
Sawchuk Wealth founder Terry Sawchuk told Yahoo Finance recent hawkishness from Fed policymakers has stemmed political pressure to look like they’re fighting inflation. “I think the Fed’s going to back off of all of this at some point,” he said.
Here’s how the main benchmarks fared in extended trading Wednesday evening:
S&P 500 futures (ES=F): -32 points (-0.70%), to 4,545.25
Dow futures (YM=F): +44 points (+0.12%), to 35,536.00
Nasdaq futures (NQ=F): -260.75 points (-1.68%) to 14,853.75
Crude (CL=F): -$0.43 (-0.49%) to $87.83 a barrel
Gold (GC=F): -$2.70 (-0.15%) to $1,807.60 per ounce
10-year Treasury (^TNX): -3.4 bps to yield 1.7660%
A trader works on the floor of the New York Stock Exchange at the closing bell January 14, 2022, in New York, New York. (Photo by TIMOTHY A. CLARY / AFP) (Photo by TIMOTHY A. CLARY/AFP via Getty Images)
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc