US open: Wall Street opens lower after Amazon, Apple disappoint

US futures

Dow futures -0.23% at 35650

S&P futures -0.6% at 4569

Nasdaq futures -0.94% at 15630

In Europe

FTSE -0.35% at 7215

Dax -0.62% at 15588

Euro Stoxx -0.47% at 4211

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Apple set to lose its most valuable company crown

US stocks are set to fall with the Nasdaq leading the charge lower after Amazon and Apple disappointed with results after the close. The Nasdaq had charged to a fresh all time high earlier in the session on the back of solid earnings, particularly from the tech sector. However, the mood soured after Apple and Amazon’s numbers.

Apple reported EPS $1.24 in line with forecasts. This market the first time since 2016 that Apple didn’t beat earnings forecast. Revenue came in at $83.36 billion, short of $84.51 billion forecast and up 29% year on year.  Apple’s disappointing numbers are attributed to the supply chain constraints that it had been experiencing and amount to around a $6 billion hit. These supply chain issues include chip shortages and also manufacturing disruptions due to covid in Southeast Asia. The stock trades -3.5% pre-market.

Amazon all disappointed as growth slowed and costs rose. The e-commerce and cloud computing firm posted softer than expected Q3 sales amid a tight labour market and supply chains issues. Whilst the company has spent heavily to build out its fulfilment network, labour shortages and supply chain disruptions made it harder to meet demand. Amazon EPS came in at $6.12, well short of the $8.92 forecast on revenue of $110.8 billion up 15% from a year earlier.

These are very much supply side issues that the tech darlings of Wall Street had broadly escaped in earnings until now.

Helping the mood slightly US core PCE inflation numbers came in slightly weaker than expected but still very elevated at 3.6% expected ahead of the FOMC next week.

 

FX – USD rebounds

The US Dollar is rebounding after steep losses in the previous session following the weak GDP data. Softer quarterly growth forced investors to reprice the likelihood of a rate rise by the Fed

EUR/USD is paring gains from the previous session. EUR/USD trades lower despite after a slew of data. German GDP came in weaker than forecast at 1.8% QoQ, down from an upwardly revised 1.9% but missing forecasts of 2.2%. Meanwhile Eurozone GDP was stronger than forecast at 2.2% and in line with Q2. Eurozone inflation rose further rises to 4.1% hitting a new 13 year high. However, the ECB insisted yesterday that they still consider that inflation would be temporary.

 

Oil set for first weekly loss in 9 weeks

Oil prices are edging higher after a mixed performance in the previous session. Whist WTI booked mild gains, Brent settled slightly lower. Both benchmarks are set for weekly losses. For WTI crude oil this will mark the first weekly decline after 9 weeks of rising prices.

Concerns over increased supply from Iran should nuclear talks with the West go well, combined with higher than expected US crude oil inventories have seen investors book profits after a tremendous run higher in oil.

WTI crude trades +0.34% at $82.60

Brent trades +0.3% at $83.93

Learn more about trading oil here.

 

Looking ahead

15:00 US Michigan sentiment

18:00 Baker Hughes rig count