Stock Futures Waver Ahead of Big Tech Earnings

Telecommunications giant Verizon is scheduled to post earnings before the opening bell. Tesla and IBM are expected to report after markets close. 

Stocks have climbed in recent days as investors parsed strong earnings. Major companies have said that labor shortages, higher raw-materials prices and supply-chain issues haven’t eroded profits substantially, reassuring investors.   

For tech companies like the ones reporting Wednesday, investors will be watching for an update on disruptions in the semiconductor space and the ability of large firms to increase prices to consumers, according to Kiran Ganesh, a multiasset strategist at UBS Global Wealth Management.

“Markets are taking a bit of a breather after a very strong run. Earnings are very good so far, across a pretty broad range. We’re looking out for margins, and comments on input costs, and we haven’t really seen too much concern on that,” he said. “This is what’s really been supporting the rally.”  

Netflix shares slipped 1.3% in after hours trading. The company said it added more new users than expected in the last quarter, but its co-chief executive also apologized for defending a controversial comedy special by Dave Chappelle. 

Investors are awaiting a Federal Reserve report about economic conditions known as the Beige Book, which is expected to be released at 2:30 p.m. ET.

Early Wednesday, the yield on the benchmark 10-year Treasury note reached 1.673%, its highest level since May, up from 1.634% Tuesday. It then eased down to 1.644%.

“Higher yields mean stock valuations start to look more challenging and it undermines the ‘no alternatives’ argument for stocks if bonds start to yield something meaningful,” Mr. Ganesh said. “We’re not near that point yet, but if we incrementally move up, investors will start to grow a little more concerned.” 

Bitcoin traded at around $63,900, 0.3% below the level notched Tuesday after the first bitcoin futures exchange-traded fund began trading. The cryptocurrency has climbed more than 7% in the past two days.  

Oil prices retreated. Global benchmark Brent crude declined 0.7% and traded at $84.45 a barrel. 

Overseas, the pan-continental Stoxx Europe 600 advanced 0.2%. Nestlé shares climbed 2.8% after the Swiss food giant upgraded its full-year sales outlook. Credit Suisse declined 1% after the bank admitted to defrauding investors about a Mozambican deal, and was fined $475 million. Also Tuesday, Switzerland’s financial regulator said the bank’s efforts to spy on executives were broader than previously known and broke supervisory law.

In Asia, major benchmarks were mixed. The Shanghai Composite Index edged down 0.1%, while Hong Kong’s Hang Seng Index rose 1.2%.

Write to Anna Hirtenstein at [email protected]