The market rebound of the last few days appears to have run out of gas. Although US indices finished with gains of 0.5% to 1.0%, there were cracks with Alphabet failing to close above its previous highs near $3,000 and Paypal plunging 24.6% off of weak guidance. Overnight, momentum turned back downward with the Nikkei falling 1.0%, while the Dax dropped 0.3% and the FTSE fell 0.2%.
US index futures have also turned back down this morning especially NASDAQ futures which have plunged 2.0%, compared with losses of 1.0% for S&P futures and 0.2% for Dow futures. Commodities are also under pressure this morning with WTI crude oil falling 1.2%, and copper sliding 0.8%. Natural gas remains volatile, plunging 10.2% and giving back some of its recent spike with the latest storm passing through and cold temperatures easing.
The Bank of England raising its benchmark interest rate by 0.25% for the second meeting in a row to 0.50% and setting the stage for potentially multiple rate hikes this year from the Bank of Canada and the Federal Reserve potentially starting as soon as March hasn’t helped matters but that at least was widely expected.
The big shocker that has rocked the markets this morning is a big earnings miss from Facebook parent company Meta Platforms ($3.67 vs street $3.85) and weaker than expected Q1 sales guidance ($27-29B vs street $30.1B). Just as a 7.5% rally for mega cap Alphabet helped to pull the S&P and NASDAQ up yesterday, a 23.2% premarket plunge for mega cap Meta appears to be dragging on those index futures today. Other social media stocks are also under pressure in premarket action this morning with Snap trading down 18.2% and Twitter trading down 8.6%. Meanwhile streaming service Spotify is down 12.4% in premarket action after reporting slowing subscriber growth.
In economic news, US jobless claims were not as bad as feared (238K vs street 245K) but it’s not clear if that was enough to offset yesterday’s big ADP payrolls disappointment. Tomorrow brings Canadian jobs (street -117.5K) and US nonfarm payrolls (street 150K). In addition to the headline numbers wage inflation reports for both Canada (previous 2.7%) and the US (street 5.2% vs previous 4.7%) may attract attention for the interest rate implications.