Technology Stocks Retreat Despite Earnings Beats as Energy Prices Climb

AI-related stocks have resumed their retreat overseas and in the United States this morning. Overnight earnings have generally exceeded expectations, but market reactions remain mixed, with Industrials and Consumer Products companies receiving a more positive response than Technology companies. Energy prices are rising amid concerns that Middle East hostilities could escalate following upcoming elections in the United States and Israel.

Meta Platforms* beat Street sales expectations last night, while Tesla, Southwest Airlines, CSX, Procter & Gamble, Lockheed Martin, Spotify, IBM and Lam Research also exceeded Street estimates. In premarket trading, Lam Research is down 7.4%, IBM is down 5.5%, Tesla is down 3.7% and Meta is down 2.2%, while Procter & Gamble is up 3.0% and Lockheed Martin is up 3.6%. Las Vegas Sands disappointed on earnings, consistent with recent anecdotal reports of slowing tourism in Nevada.

US futures are under pressure, with NASDAQ futures down 1.6% and Dow futures down 0.6%. Asian markets posted sharp declines, with the Nikkei down 2.6%, the Hang Seng down 3.0% and the KOSPI down 3.5%. In Europe, the DAX is down 0.8% and the FTSE is down 0.3%.

In Commodities, crude oil is up 2.3%, still below $100.00/bbl, while Brent crude is up 2.9%, trading back above $110.00/bbl. Gasoline is up 2.3%, remaining below $3.20/gallon. Metals have come under renewed selling pressure, with gold down 1.7%, breaking below $4,100/oz, copper down 2.6%, falling below $6.50/lb, and silver down 3.0%.

Bonds are climbing, pushing the US 10-year Treasury note yield towards 5.05% and the 30-year yield towards 5.35%. In Currencies, the US Dollar Index is steady, while the Euro is down 0.2% and the Loonie is up 0.1%.

Newmont Mining and Western Digital headline earnings after today’s close, followed by Rogers Communications tomorrow morning. Global flash PMI reports and retail sales figures for Canada and the UK are due Friday morning.

*Shares of Meta Platforms are held in portfolios managed by SIA Wealth Management.

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