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Growing fears of a global economic slowdown and a more aggressive Federal Reserve pummeled technology and growth stocks on Tuesday, with Tesla (NASDAQ:TSLA)’s 12% slump weighing the most on the S&P 500 and the Nasdaq.
The sentiment appeared to improve in premarket trading as Microsoft Corp (NASDAQ:MSFT) jumped 5% after it forecast double-digit revenue growth for the next fiscal year, driven by demand for cloud computing services.
Visa Inc (NYSE:V) rose 5.6% after the payments network said it expects revenue to accelerate past pre-pandemic levels, fueled by a rebound in consumer spending.
However, Google-parent Alphabet (NASDAQ:GOOGL) Inc fell 2.8% as slowing YouTube ad sales led the company to report quarterly revenue below expectations.
Nearly a third of the companies on the S&P 500 will report results this week. Facebook-owner Meta Platforms Inc, which will report results after market close, fell 2.1%.
Megacap growth stocks have been battered since the start of the year as investors fear about the impact of higher interest rates, inflationary pressures, geopolitical tensions and China’s COVID-19 led lockdown on the global economic outlook.
“I don’t think there is confidence right now in renewed leadership (in megacap stocks) but with the declines there will be attempts to find entry points into some of these major names,” said Neil Wilson, chief markets analyst at Markets.com.
The tech-heavy Nasdaq has shed 20.2% so far this year, while the benchmark S&P 500 is down 12.4%.
Nevertheless, overall earnings have been better than expected. Of the 134 companies in the S&P 500 that reported earnings through Tuesday, 80.6% of them have exceeded Wall Street expectations. Typically, only 66% of companies beat estimates.
At 07:01 a.m. ET, Dow e-minis were up 353 points, or 1.06%, S&P 500 e-minis were up 36.75 points, or 0.88%, and Nasdaq 100 e-minis were up 108.5 points, or 0.83%.
Among other movers, toymaker Mattel Inc (NASDAQ:MAT) climbed 11.3% after a source told Reuters it was exploring a sale.
Audio streaming platform Spotify Technology SA (NYSE:SPOT)’s U.S.-listed shares gained 2.8% after it reported quarterly revenue that beat analysts’ estimates on higher advertising income.
