Stock market today: Nasdaq, S&P 500 futures sink as Meta, Microsoft revive Big Tech's AI spending worries
10/31/2024 18:57
Meta and Microsoft earnings have stirred up worries about AI and Big Tech, as a Fed-favored reading on inflation looms.
The Nasdaq led a tumble in US stock futures on Thursday as Meta (META) and Microsoft (MSFT) earnings sparked worries about prospects for Big Techs amid rising AI costs.
Contracts on the tech-heavy Nasdaq 100 (NQ=F) sank 0.9%, while S&P 500 futures (ES=F) fell over 0.7%. Dow Jones Industrial Average futures (YM=F) dropped roughly 0.5%, on the heels of losses for the major gauges.
Optimism for a Big Tech boost to stocks took a knock as investors digested Meta and Microsoft's quarterly reports. While the results beat Wall Street estimates, both companies flagged that they will step up already high spending on AI infrastructure.
Concerns that would put pressure on profitability helped send shares in both Meta and Microsoft about 4% lower in premarket trading.
The unsettled mood spread to Amazon (AMZN) and Apple (AAPL), which round off this week's "Magnificent Seven" earnings with reports after the close on Thursday. Shares in the tech megacaps stepped lower in premarket.
Investors are also on tenterhooks waiting for the latest reading on the Personal Consumption Expenditures index, the last key inflation input for the Federal Reserve before its policy decision next week. Economists expect annual "core" PCE — which excludes food and energy prices — to come in at 2.6% for September, down from 2.7% the previous month.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Also on deck are updates on jobless claims and job cuts, in focus after an October surge in private payrolls muddied the picture ahead of the crucial monthly jobs report due for release on Friday.
LIVE 1 update
Starbucks new CEO chats with Yahoo Finance
Starbucks (SBUX) shares are indicating a slightly higher open today despite more details around the dreadful quarter pre-announced last week.
And I will tell you why: new CEO Brian Niccol.
I have known Niccol for about 10 years, going back to his time leading Taco Bell at Yum! Brands (YUM). One thing among many that I have noticed about him is how he really digs into problems and calmly articulates them — and an action plan — to team members and investors.
That was same Niccol who yours truly and our senior reporter Brooke DiPalma encountered last night in a 15 minute post-earnings call phone chat. Such calm under fire will prove to be a good thing for Starbucks as it has many, many problems to address.
Niccol seemingly has more knowledge about Starbucks in his first three months than the prior CEO gained in more than a year!
He is wasting no time fixing things at Starbucks, as Brooke reports here.
But here is one exchange I had with him on the phone regarding the need to slash the menu size by 25% or more. Cutting the Starbucks menu down is vitally important to driving a better business on the top and bottom lines.
It's good to see Niccol understand this (he made it a point to keep the Chipotle (CMG) menu small, carefully introducing a new item or two a year after thorough testing) as his predecessors never did.
