(Bloomberg) — US equity futures dropped as investors navigate the trade war and a busy slate of earnings from some of the world’s biggest companies.
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Futures on the Nasdaq 100 were down 0.7% as Google parent Alphabet Inc. and Advanced Micro Devices Inc. plunged in US pre-market trading after disappointing results. Contracts on the S&P 500 fell 0.4%, suggesting Wall Street’s rebound may be short-lived.
While the first volleys in the latest US-China trade war made clear that Xi Jinping is taking a more cautious approach than during Donald Trump’s first term, tariff risks remain at the forefront. Disappointing results from Alphabet and AMD also heightened unease about the outlook for megacap tech companies that have driven the S&P 500’s gains. Amazon.com Inc. is scheduled to report on Thursday.
“It remains tough for anyone to have a particularly high degree of conviction when operating in such an uncertain environment,” said Michael Brown, senior research strategist at Pepperstone Group Ltd. “I still favor adopting a more cautious stance in the short run, as uncertainty remains elevated, and participants chew through this week’s remaining risk events, including earnings from Amazon, and Friday’s US jobs report.”
The yen gained against the greenback and gold rose to a record high on haven demand. The 10-year Treasury yield dipped and an index of dollar strength fell, though it pared the decline after a report showed employment at US companies picked up in January by more than forecast, highlighting resilient job growth despite mounting uncertainty.
Alphabet posted fourth-quarter revenue that missed analysts’ expectations after growth in its cloud business slowed, raising concern from investors about the billions the company is spending on artificial intelligence. Chip maker AMD gave a disappointing outlook for its data center business, an area where it’s struggling to catch up with AI computing leader Nvidia Corp.
“Those expectations that analysts have placed, the bar is a lot higher this time,” said Aneeka Gupta, director of macro-economic research at Wisdomtree UK Ltd. “There is a greater probability that they don’t meet that higher bar. If they disappoint, the ramifications are a lot bigger.”