Dow Futures Slide 200 Points Ahead of Major Tech Earnings

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Key Takeaways

• US stock futures drop as Big Tech is set to report quarterly earnings
• Bitcoin trades sideways after a strong move to the upside on Monday

Stock futures traded lower on Tuesday in a pre-market environment. Dow futures dropped as much as 200 points, or more than half a percent, while S&P500 futures and Nasdaq futures were lower by 0.40%, and 0.30%, respectively.

The decline ahead of the opening bell in New York today came after the major stock gauges edged higher to a second straight session of record closings. On Monday, the elevated market mood buoyed by strong earnings, propelled the Dow Jones Industrial Average to a close of 35,144.31, with a daily gain of 82.76 points, or 0.24%.

The S&P500 advanced with the same percentage gain, or 10.51 points, to a close of 4,422.30. The Nasdaq Composite swung between gains and losses during the session and ultimately managed to close in the green, higher by 3.72 points, or 0.03%, to 14,840.71.

All three stock benchmarks continued their record-breaking streak from Friday as investors bet the blowout earnings reports would continue to pile this week. Before the opening on Tuesday, US stock averages are sitting at fresh records as each of the three is on a five-day winning stretch.

Second-Quarter Earnings Reports Continue

The flurry of American companies reporting this week kicked off with Tesla’s strong financials for the second quarter. The EV maker, based in Palo Alto, California, posted revenue of nearly $12bn for the June quarter, beating estimates of $11.2bn. Net income arrived at $1.1bn, exceeding expectations of $600m, while earnings per share landed at $1.45 a share, vs 98 cents per share expected.

The electric-car maker managed to surprise with a tenfold increase in profit compared with the year-ago quarter when net income amounted to $104m. The challenging market environment defined by chip shortages and supply chain problems was the focus of Elon Musk’s conversation with shareholders during the earnings call.

“The amazing part is Tesla didn’t go bankrupt in reaching large-scale production, because everyone else did,” Mr. Musk said, referring to the “hundreds” of start-up companies in the car industry who have failed to scale their production capacity.

The latest figures in the Tesla quarterly statement include a $23m impairment on bitcoin holdings. Shares of the company were modestly higher by 1% in pre-market trading on Tuesday after they climbed 2% during the regular session yesterday.

Second-quarter corporate earnings continue with the Big Tech on deck to reveal how they weathered the Covid-19 pandemic, higher inflation pressures, and overall market jitters during the second trimester of 2021.

Google-parent Alphabet, Apple, and Microsoft are staged to present their financial reports on Tuesday after the closing bell.

Today also marks the beginning of the Fed’s two-day policy meeting. During their gathering, Fed officials will be discussing the rapidly-heating inflation and the timing of reducing the number of bond purchases. Investors will be looking toward Wednesday’s press conference by Fed Chair Jay Powell for clues on how the central bank intends to deal with the looming uncertainties in the US economy.

Meanwhile, the crypto space today is trading relatively muted. Bitcoin’s price has been subdued near the $37,000 mark, while Ether’s price is pinned at $2,200, largely unchanged for the day. Bitcoin and the digital asset space received a heavy boost yesterday when the entire market added nearly $120bn to its valuation.