U.S. Futures Fall as Tech Outlook Hits Sentiment: Markets Wrap

(Bloomberg) — U.S. equity futures fell Friday after post-earnings slumps in Amazon.com Inc. and Apple Inc. snuffed out some of the optimism from a Wall Street rally. The yuan slipped as Covid lockdowns sap China’s economy.

Contracts on the S&P 500 and technology-heavy Nasdaq 100 retreated, with the latter down 1%. Asian shares wavered, hampered by the uncertainty in China.

Amazon projected sluggish sales growth and Apple flagged supply constraints. E-commerce giant Amazon shed 9% in extended trading and Apple lost 2%. That clouded the S&P 500’s best climb since early March in regular hours.

Volatility in the currency markets moderated compared with the upheavals of a day earlier. The yen pared a tumble while staying near 20-year lows. The dollar was set for its best week since 2021 amid investor caution and as the Federal Reserve readies sharp interest-rate hikes to slow inflation.

Oil was near $105 a barrel. Traders are evaluating the prospect of a European Union ban on Russian crude in retaliation for the invasion of Ukraine.

Corporate earnings are just the latest variable to whipsaw markets. There are concerns that tightening U.S. monetary policy, the war in Ukraine and China’s Covid outbreak all herald more challenges for investors.

“The Fed’s record on soft landings is not that strong,” Carol Schleif, deputy chief investment officer at BMO Family Office LLC, said on Bloomberg Television. “Markets are watching very, very carefully to see if we can thread that needle.”

The latest U.S. data showed that the world’s largest economy unexpectedly shrank for the first time since 2020. That reflected an import surge tied to solid consumer demand, suggesting growth will return imminently.

The figures underscore the debate about how much scope the U.S. central bank has to tighten policy before the economy cracks. Markets continue to project a half-point Fed rate hike next week. 

“A year from now, 10-year yields are most likely going to be lower than where we are today,” Jimmy Chang, chief investment officer at Rockefeller Financial LLC, said on Bloomberg Television, referring to Treasuries. “I do believe at some point the economy starts to weaken, the Fed will be less hawkish, perhaps even go into a pause mode by, say, early next year.”

Treasuries were steady Thursday, leaving the 10-year U.S. yield at 2.82%. Treasury futures edged up. There’s no cash trading due to a Japan holiday. 

Elsewhere, Elon Musk sold about $4 billion worth of Tesla Inc. shares after announcing a blockbuster $44 billion deal to buy Twitter Inc. Musk tweeted that he has “no further Tesla sales planned after today.”

Some of the main moves in markets: