Intel stock extends gains after report of possible U.S. government stake
Investing.com - U.S. stock futures tick lower ahead of the last session of one of the busiest weeks for financial markets so far this year. The White House says it will raise tariffs on dozens of countries as President Donald Trump’s much-anticipated trade deadline passes. Tech giants Amazon.com and Apple unveil their latest returns, with their artificial intelligence plans a central focus for investors. Meanwhile, the closely-watched nonfarm payrolls report for July is due out, as a recently-resilient labor market begins to show some signs of cooling.
1. Futures lower
U.S. stock futures were trading in the red on Friday, as investors geared up for the final day of a pivotal week that has featured everything from international trade developments and central bank decisions to mega-cap tech earnings and crucial economic data releases.
By 03:32 ET (07:32 GMT), the Dow futures contract had dropped by 319 points, or 0.7%, S&P 500 futures had slid by 41 points, or 0.6%, and Nasdaq 100 futures had declined by 158 points, or 0.7%.
The main averages on Wall Street fell in the prior session, retreating from earlier gains, as worries over the implications of Friday’s trade deadline outweighed blockbuster quarterly returns from tech giants Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT).
Shares of Facebook-owner Meta soared by more than 11%, while software titan Microsoft’s stock price climbed -- making it the second publicly-traded company after Nvidia (NASDAQ:NVDA) to surpass $4 trillion in market value. Underpinning these advances were hopes that these firms’ plans to spend tens of billions of dollars on AI are beginning to pay off.
Elsewhere, design software maker Figma enjoyed a sterling market debut. Shares in the firm spiked in the triple digits, giving it a market cap of around $50 billion and potentially clearing the path for other high-growth listings.
2. Trump announces sweeping new tariffs for a host of countries
After weeks of negotiation and delays, the deadline for President Trump’s sweeping "reciprocal" tariffs to take effect is here.
Trump signed an executive order on Thursday night lifting tariffs to as much as 50% on dozens of countries, as he steps up his drive to upend a global trading system he has described as unfair to U.S. interests. The levies are now set to activate at 12:01 am on August 7.
Major industrialized economies such as the European Union, Japan and South Korea will face duties of 15%, while other countries who run a trade surplus with the U.S. will be hit with tariffs of 10%.
Even higher tariffs are set to be slapped on other nations, including 50% levies on Brazil. Trump increased tariffs on Canada to 35% for goods that do not comply with the U.S.-Mexico-Canada Agreement, which was signed during Trump’s first term.
Meanwhile, Trump and Mexican counterpart Claudia Sheinbaum said Mexico was granted another 90-day reprieve to forge an agreement with Washington.
3. Amazon reports higher sales and profits
Amazon reported better-than-expected second-quarter earnings and revenue, bolstered by e-commerce strength and advertising, but shares slipped by more than 6% in extended trade as operating margins at the group’s key cloud computing unit fell short of investor hopes.
The company reported earnings per share of $1.68, beating the average analyst estimate of $1.32.
Revenue at the latest member of the so-called "Magnificent Seven" club of mega-cap tech names rose 11% year-over-year to $167.7 billion, also ahead of expectations for $162.05 billion.
Amazon (NASDAQ:AMZN) Web Services, its crucial cloud computing division, delivered sales of $30.9 billion, up 17.5% from a year earlier. While slightly above consensus expectations for 17% growth, concerns remain that AWS may have lost more market share than expected, said Gene Munster, Managing Partner of Deepwater Asset Management.
Analysts at Vital Knowledge also flagged that operating margins at AWS of 32.9% for the quarter were below expectations.
Free cash flow was at near break-even, compared with consensus forecasts of $8.2 billion, due in large part to large capital expenditures. Like its Big Tech peers, Amazon has targeted heavy spending on artificial intelligence as it looks to harness -- and profit from -- the nascent technology.
4. Apple results top estimates
Apple reported Thursday third-quarter results that beat Wall Street estimates, driven by better-than-expected iPhone sales as China demand rebounded and services revenue hit an all-time high.
Shares of Apple (NASDAQ:AAPL) rose more than 2% in recent extended hours trading, even as analysts noted muted tailwinds from AI. Some observers have argued that Apple has fallen behind in the AI arms race, potentially denting the future appeal of its products against AI-enhanced rivals.
For the three months ended June 28, Apple reported earnings of $1.57 per share on revenue of $94.04 billion. Analysts polled by Investing.com had anticipated per-share income of $1.43 on revenue of $89.53 billion.
Sales of Apple’s flagship iPhone, which accounts for nearly half of total revenue, rose 13% to $44.58 billion, compared to estimates of $40.22 billion.
"Our installed base of active devices also reached a new all-time high across all product categories and geographic segments," the company said.
Demand in China, where Apple has been grappling with intensifying domestic competition, also regained some ground after declining on an annualized basis in the March quarter. Apple’s sales in Greater China increased to $15.37 billion from $14.73 billion a year earlier, topping estimates of $15.19 billion.
Despite calling the returns "solid," analysts at Vital Knowledge flagged that Trump’s tariffs, and their impact on Apple’s well-oiled international supply chain, are still a major question mark around the business. An imminent ruling in a U.S. court about whether Google (NASDAQ:GOOGL) can pay for search exclusivity on Apple devices presents another possible headwind, they said.
"[I]f it can’t, that might mean a massive hit to Apple’s services revenue and overall operating income," the analysts added.
5. Nonfarm payrolls ahead
Economists will have the chance to parse through the latest gauge of the American labor market on Friday, when the Labor Department unveils its all-important monthly jobs report for July.
The U.S. is tipped to have added 106,000 roles last month, down from 147,000 in June, while the unemployment rate is seen ticking up slightly to 4.2% from 4.1%.
Signs have emerged this week of a labor picture highlighted by muted hiring and less workers leaving their roles to seek new opportunities -- trends that could indicate some cooling in what has recently been a resilient job market.
In theory, this could persuade the Federal Reserve to cut interest rates to spur on spending and investment.
But the Fed is simultaneously grappling with inflation that is hovering above its long-term 2% target, and some early indicators appear to be suggesting that the costs of Trump’s tariffs are starting to feed into the prices of certain trade-exposed items. Policymakers, as a result, may be keen to keep rates relatively elevated to prevent inflation from soaring.
On Wednesday, the central bank chose to leave borrowing costs unchanged for a fifth straight meeting, even as it faced intense pressure from Trump to quickly cut rates to help boost the economy. While the decision was widely anticipated, what the Fed chooses to do at its next gathering in September is unclear.