January 27, 2023

Stock futures contracts drop in overnight trading

Microsoft shares pared gains hours later, turning negative

Microsoft shares fell about 1% in after-hours trading, reversing previous gains.

Shares initially rose after the company reported quarterly earnings per share that beat Street’s expectations. However, investor sentiment soured after Microsoft issued disappointing guidance for revenue in the current quarter of its earnings conference call.

The company forecast fiscal third-quarter revenue of $50.5 billion to $51.5 billion, while analysts surveyed by Refinitiv expected $52.43 billion.

Read more about Microsoft results here.

Darla Mercado, Jordan Novate

Morgan Stanley’s Mike Wilson predicts that profits will start to crunch on the weaker consumer

Mike Wilson of Morgan Stanley said investors should prepare for tough times ahead.

“The numbers are finally going to come down in a way that we didn’t think would happen in the fourth quarter, which it didn’t, but right now, we think it is,” Wilson said Tuesday on CNBC’s “The Closing Bell: Overtime.” ”

The investment analyst said he expects earnings to start to shrink as companies deal with a weakening consumer.

However, he is open to changing his outlook if he does not see a “more meaningful” withdrawal in the next three to four months, or by April.

“We’ll probably back down on our call, … because we’re still in a world where there’s some sort of financial repression, and bonds aren’t necessarily a great alternative in the long term, and stocks are kind of the only game in town in the inflationary environment.” “We are not ready to make that call today because we believe the risk return is out of reach.”

– Sarah Maine

Microsoft shares rose after earnings results showed resilience in the cloud

Microsoft shares led the gains in after-hours trading, up more than 4% after its quarterly results came in above estimates on the top and bottom lines. The stronger-than-expected report was driven by Strong growth in its cloud unit.

Revenue in Microsoft’s intelligent cloud segment was $21.51 billion, up 18%. Meanwhile, sales from Azure and other cloud services, which Microsoft does not report in dollar terms, increased 31%.

– Yun Lee