Stocks slip after Microsoft earnings with Apple on deck
Equity futures were weaker in morning trading as worries over the virus, lockdowns and rocky vaccine rollouts have all dampened risk appetite. Record revenues from Microsoft (MSFT) after the close Tuesday are providing some support for its shares, while Boeing (BA) is lower after having reported its largest annual loss on record. Reports from Apple (AAPL), Facebook (FB), and Tesla (TSLA) are due after the close today as the earnings pace continues to increase.
ECONOMIC EVENTS: In the U.S., durable goods orders rose 0.2% in December, which was weaker than expected, but much of the miss was in transportation orders, which declined 1.0%. Excluding transportation, orders were up a better than expected 0.7%.
The FOMC resumed its meeting and will announce its policy statement at 2 pm ET, after which Chair Powell will follow with his press conference at 2:30 pm ET.
TOP NEWS: Shares of Microsoft (MSFT) are 2% higher following last night's stronger than expected fiscal Q2 results. Goldman Sachs analyst Kash Rangan, who raised the firm's price target to $315 from $285 and reiterates a Buy rating on the shares, noted that revenue upside was mainly driven by commercial cloud and server products. The analyst, who says the results validate his cloud thesis, added that Azure is poised for favorable comparison to industry leader Amazon Web Services (AMZN) at an estimated run-rate of $29B growing about 50%.
Boeing (BA) shares are down 3% after the company reported worse than expected losses in the fourth quarter, driven in part by a $6.5B pre-tax charge recorded for its 777X program. Boeing now anticipates that the first 777X delivery will occur in late 2023. Separately, the UK Civil Aviation Authority announced that it will now allow UK airlines to operate passenger flights with the Boeing 737 MAX aircraft, "subject to close oversight."
Starbucks (SBUX) shares have dropped 7% after the company reported fiscal Q1 results that included a global comparable store sales decline of 5%. In addition, Starbucks announced that Rosalind Brewer is resigning from her position as COO and group president. Subsequently, Walgreens Boots Alliance (WBA) announced the appointment of Brewer as the company's CEO, effective on March 15.
In other earnings news, AT&T (T) is down fractionally after reporting Q4 results and guiding for FY21 adjusted EPS to be "stable with 2020." Of note, AT&T reported total domestic HBO Max and HBO subscribers have topped 41M and nearly 61M worldwide, with HBO Max activations having doubled since end of third quarter 2020.
In M&A news, Veritas Capital announced a bid to acquire Perspecta (PRSP) for $29.35 in cash.
Volatility, and massive surges higher, in some of the most shorted stocks in the market have continued, with GameStop (GME) and AMC Entertainment (AMC) continuing to be two of the headline examples of this phenomenon. Amid the volatile trading, Ameritrade has told clients of some restrictions being put on transactions involving GameStop and AMC, according to Bloomberg. Meanwhile, Melvin Capital, the hedge fund targeted by Reddit, closed out its short position in GameStop on Tuesday afternoon after taking a "huge" loss, Gabe Plotkin, the fund's manager, told CNBC's Andrew Ross Sorkin.
MAJOR MOVERS: Among the noteworthy gainers was Vir Biotechnology (VIR), which rose 33% after announcing a collaboration with Eli Lilly (LLY) and GlaxoSmithKline (GSK) to evaluate a combination of two COVID-19 therapies in low-risk patients with mild to moderate COVID-19. Also higher was Abbott (ABT), which gained 2% after reporting quarterly results. Among the notable losers was Anthem (ANTM), which fell 6% after reporting quarterly results.
INDEXES: Near midday, the Dow was down 318.02, or 1.03%, to 30,619.02, the Nasdaq was down 135.29, or 0.99%, to 13,490.78, and the S&P 500 was down 52.49, or 1.36%, to 3,797.13.