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Amazon down after signaling slower AWS growth
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Pinterest, Snap fall on downbeat forecasts
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Intel gains on upbeat view on margins
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U.S. consumer spending flat in March
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Futures down: Dow 0.34%, S&P 0.24%, Nasdaq 0.11%
(Adds details on economic data, analyst comment)
By Sruthi Shankar and Ankika Biswas
April 28 (Reuters) - Wall Street was set to open lower
on Friday after Amazon warned about a slowdown in its cloud
business, while strong inflation data cemented bets that the
Federal Reserve will hike interest rates again next week.
Amazon.com Inc shares lost 2.3% in premarket
trading as the company signaled its cloud growth would slow
further, overshadowing its better-than-expected quarterly
results.
Snapchat-owner Snap Inc dived 17.6% as it warned
next quarter results could miss Wall Street targets, while
Pinterest Inc dropped 11.0% after the image-sharing
platform forecast second-quarter revenue growth below estimates
as advertising spending declines.
Cloudflare Inc also tumbled 22.5% on a downbeat
revenue forecast from the cloud services provider.
"We are seeing a general dialing back of spending by
businesses. So the lack of growth that we're seeing from some of
the technology companies is not necessarily a surprise," said
Paul Nolte, market strategist at Murphy & Sylvest Wealth
Management.
The weak updates follow stronger-than-expected earnings from
big technology and growth companies this week including Alphabet
Inc , Microsoft Corp and Meta Platforms Inc which led analysts to improve first-quarter profit
estimates for S&P 500 companies.
The main U.S. indexes ended up sharply on Thursday, with the
benchmark S&P 500 logging its biggest one-day percentage
gain since early January.
Analysts expect first-quarter earnings for S&P 500 companies to fall 2.4% year-over-year compared with a forecast for a 5.1% fall at the start of April.
Data earlier showed U.S. consumer spending was unchanged in March, while underlying inflation pressures remained strong, keeping the Fed on course to hike interest rates by 25 basis points next week, a move largely priced in by investors. "The consensus is that the Fed will raise rates at their meeting next week," said Art Hogan, chief market strategist at B Riley Wealth. "That likely remains in place and hasn't really budged with this data. The only discrepancy between consensus estimates and the Fed right now seems to lie in when and if they may cut rates." The University of Michigan's preliminary reading of consumer sentiment index for April, due after the opening bell, is also expected to remain unchanged at 63.5. Data on Thursday showed U.S. economic growth slowed more than expected in the first quarter, while plunging consumer confidence in April heightened the risk that the economy could fall into a recession this year. The U.S. central bank will publish at 11 a.m. ET (1500 GMT) its internal review of its supervision of Silicon Valley Bank, whose failure set off a broader loss of investor confidence in the banking sector.
First Republic Bank rose 5.5% as U.S. officials are coordinating urgent talks to rescue the beleaguered lender, three sources familiar with the matter told Reuters. At 08:56 a.m. ET, Dow e-minis were down 115 points, or 0.34%, S&P 500 e-minis were down 10 points, or 0.24%, and Nasdaq 100 e-minis were down 14.75 points, or 0.11%. Chipmaker Intel Corp gained 6.5% after it said gross margins will improve in the second half of the year. Colgate-Palmolive Co inched up 0.7% after the toothpaste maker lifted its annual organic sales forecast betting on consistent price hikes.
(Reporting by Sruthi Shankar and Ankika Biswas in Bengaluru;
additional reporting by Johann M Cherian
Editing by Vinay Dwivedi)
