U.S. Stock Futures Show Mixed Trading

U.S. stock futures showed mixed trading in the early hours of Wednesday, with Alphabet shares experiencing a sharp decline while Microsoft saw an increase following earnings.

Stock-Index Futures Movement

• S&P 500 futures (ES00, -0.38%) dipped by 14 points or 0.3%, settling at 4257.
• Dow Jones Industrial Average futures (YM00, +0.05%) rose by 37 points or 0.1%, reaching 33306.
• Nasdaq 100 futures (NQ00, -0.61%) eased by 81 points or 0.5%, reaching 14765.

Previous Session Performance

In the previous session, the Dow Jones Industrial Average (DJIA) rose by 205 points or 0.62% to close at 33141. The S&P 500 (SPX) showed an increase of 31 points or 0.73% to reach 4248, while the Nasdaq Composite (COMP) gained 122 points or 0.93% to settle at 13140.

Cautious Mood in Stocks

Investors remained cautious as they awaited the next installment of the third-quarter corporate earnings season, which has received a mixed reception from the market so far.

Market Sentiment and Bond Market Movement

Helping sentiment was the relatively less volatile action in government bond markets. Although the 10-year Treasury yields (BX:TMUBMUSD10Y) firmed slightly on Wednesday, they remained near one-week lows.

Lingering Concerns

However, concerns about tensions in the Middle East and reports indicating that troubled Chinese property developer, Country Garden Holdings Co. (2007, -2.82%), had been declared in default on a dollar bond were countering some of the positive sentiment in the market.

Traders' Focus Shifts to Earnings as Inflation Data Looms

As traders eagerly await the release of inflation data on Friday and the Federal Reserve policy meeting next week, their immediate focus remains on earnings reports. The premarket share price movements of technology giants Microsoft and Alphabet tell a tale of mixed results. Microsoft's share price rose by 3%, while Alphabet saw a decline of nearly 7% following the release of their respective numbers after Tuesday's closing bell.

According to data from LSEG, with almost a quarter of S&P 500 companies having already reported their earnings, an impressive 81.4% have surpassed analyst expectations. This figure outperforms the typical quarterly beat rate of 67% since 1994.

However, despite these positive earnings surprises, the stock market seems to be struggling to gain traction. Mark Newton, Fundstrat's Head of Technical Strategy, points out that a robust equity rally with strong market breadth is needed urgently to prevent selling pressure that could persist into late October. Newton adds, "Given the prevailing market weakness, it is now up to the bulls to prove their case."

Several companies are scheduled to release their earnings reports on Wednesday. This includes Boeing, T-Mobile, and General Dynamics before Wall Street's opening bell, and later in the day, Meta Platforms, IBM, and ServiceNow will disclose their results.

In addition to the earnings news, there are also important U.S. economic updates slated for release on Wednesday. Specifically, new home sales data for September will be made available at 10 a.m. Eastern time.