Nasdaq futures fall after weak Amazon guidance adds pressure to tech rout

Nasdaq 100 futures were lower Friday after disappointing Amazon earnings added to the already pressured index.

Futures tied to the Nasdaq dropped 1.2% Dow Jones Industrial Average futures were lower by 0.2% and S&P 500 futures lost 0.7%.

Amazon led the declines in premarket trading, plunging by 13% after the company posted weaker-than-expected quarterly revenue and issued disappointing fourth-quarter sales guidance.

Apple shares were initially lower too in extended trading after the company reported weaker-than-anticipated iPhone revenue, but they have since reversed higher and were last up about 0.7%. The company still beat Wall Street estimates for quarterly earnings and revenue.

Tech names were a dark cloud over the market once again on Thursday. The Nasdaq Composite lost 1.6%, due to a rout in Meta and other tech stocks following the Facebook-parent’s disappointing results. Meanwhile, the Dow rose 194.17 points, or 0.6% , for its fifth straight day of wins, helped by GDP data that hinted that inflation may be waning.

The stock market has fractured this week as investors dump technology shares following weak results and outlooks from Microsoft, Alphabet and Meta and rotate into economically-sensitive stocks that will benefit if the US economy can skirt a recession. The Dow and S&P are on pace to end the week higher by about 3% and 1.5%, respectively. The Nasdaq Composite set to finish lower by about 1%.

SoFi head of investment strategy Liz Young said the pain investors are feeling in earnings was inevitable and necessary to move forward in the current cycle.

“We’ve been waiting for this to happen,” she said on CNBC’s “Closing Bell: Overtime.” “There’s usually a sequence of events: First the market goes, then earnings go, then the economy goes. So this is finally that part where we’re seeing earnings get hit and I don’t think it’s any mistake that it’s tech getting hit the most. Tech is what has been under pressure in this market since the beginning.”

“This is just another check on the list of things that we need to get through before we can really be done with this part of the cycle,” she added.

Friday brings a quieter day for earnings. As investors digest the bloodbath in tech, they’ll have Chevron and Exxon Mobil on deck before the bell as well as AbbVie and Colgate-Palmolive.

In economic data, traders are looking forward to the Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred inflation gauge, as well as consumer sentiment and pending home sales.

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Jorge Oliveira

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