Futures for the S&P 500 Rebound After Two Days of Losses Due to Apple, Amazon, and Meta Earnings

U.S. stocks exhibited an early Thursday rebound following the market's recent two-day decline, the most substantial since October. This resurgence coincided with anticipation surrounding earnings reports from major technology giants: Apple Inc., Amazon.com, and Meta Platforms.

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In terms of performance, the S&P 500 increased by 28 points (0.6%) to 4873, the Dow Jones Industrial Average added 123 points (0.3%) to 38277, and the Nasdaq Composite gained 128 points (0.9%) to 15294. Notably, the S&P 500 had witnessed a decline of 76.59 points (1.7%) over the previous two trading days, marking the most substantial two-day percentage drop since October 27.

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Investors, recovering from the recent dip, redirected their attention to forthcoming earnings from major tech players, while also responding to comments made by Federal Reserve Chairman Jerome Powell in the post-Fed meeting press conference on Wednesday. The market is expected to remain influenced by these factors, alongside upcoming economic data related to the labor market.

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Earnings reports from Microsoft, Alphabet, and Advanced Micro Devices released on Tuesday fell short of the AI-driven optimism that had propelled the market to a record high earlier in the week. The focus now turns to Apple, Meta, and Amazon.com, whose results, if failing to meet Wall Street's high expectations, could lead to further downside for stocks, according to analysts.

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Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank, cautioned that investors have been poised to capitalize on any misstep in the tech sector, emphasizing the need for exceptional results from the three tech giants to prevent a potential tech selloff.

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Beyond the major tech players, investors are anticipating earnings from Atlassian, U.S. Steel, and Skechers. Attention is also directed towards the regional banking sector, particularly after New York Community Bancorp highlighted challenges in commercial real estate.

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Issues within regional banks may be resurfacing, as evidenced by a Japanese bank, Aozora, issuing a profit warning and experiencing a decline in its shares. Analysts suggest that problems in regional banks may be emerging following the end of the bank term funding program by the Fed, established after the collapse of Silicon Valley Bank and two other U.S. lenders in March.

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The SPDR S&P Regional Banking ETF experienced a significant decline, contributing to a year-to-date decrease of over 9%. Meanwhile, investors continue to assess the Federal Reserve's potential timeline for lowering borrowing costs. Powell's statement that a rate cut in March was not the most likely scenario disappointed some investors, but futures markets now indicate an increased certainty of rate reductions in May.

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Economic data about the U.S. labor market has been a focal point this week. The weekly report on initial jobless claims, alongside fourth-quarter productivity data, revealed a rise in unemployment applications at the end of January, potentially indicating a slight softening in the strong labor market. Despite this, the quarterly productivity report suggested increased worker productivity in the fourth quarter, implying a faster-growing U.S. economy.

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Investors also received positive manufacturing data, with the S&P manufacturing PMI survey for January showing improvement, marking the sector's strongest performance since September 2022. The upcoming Labor Department's nonfarm payrolls report for January is eagerly anticipated as a key economic indicator.

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