A man walks near Google offices on January 25, 2023 in New York City.
Leonardo Munoz | View Press | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Passing grade for Alphabet
Alphabet shares rose more than 6% in extended trading after the company reported better-than-expected revenue and profit. Second-quarter revenue rose 7% year over year to $74.6 billion, boosted by a 28% jump in revenue in Google’s cloud unit. Ad revenue increased 3.3% to $58.14 billion, dispelling fears — somewhat — of lowered ad spending in a slowing economy.
Soft guidance from Microsoft
Investors were disappointed by Microsoft’s revenue guidance for its upcoming fiscal quarter, pushing shares down about 4% in extended trading. Still, the company beat estimates for both revenue and profit in its fiscal fourth quarter, which ended June 30. Revenue rose 8% from a year earlier to hit $56.19 billion, though revenue growth in Azure, Microsoft’s cloud computing platform, slowed.
Stocks rose
U.S. stocks closed higher Tuesday — with the Dow Jones Industrial Average registering its 12th consecutive positive session — as investors digested a slew of earnings reports. The pan-European Stoxx 600 rose 0.48%, its sixth straight day of wins. The index was lifted by mining stocks, which jumped 4.46% on the back of China’s pledge to support its beleaguered property sector.
China’s new foreign minister
China removed Qin Gang as foreign minister Tuesday after he disappeared from public view for a month. Wang Yi, China’s top diplomat, will serve as the country’s new foreign minister. Qin made his last public appearance in Beijing on June 25, when he held talks with counterparts from Vietnam, Sri Lanka and Russia.
[PRO] The broadening rally’s real
Most of the gains in the S&P 500 this year have been driven by seven technology stocks, causing worries that the rally’s too narrow. But there are signs the market is broadening out in July, CNBC Pro’s Bob Pisani writes — and advises how to position your portfolio to take advantage of it.
The bottom line
The first batch of Big Tech earnings, out after the bell, was pretty mixed.
Both Alphabet and Microsoft beat estimates for the top and bottom line. But Alphabet shares soared after the company posted double-digit growth in its cloud sector, while Microsoft fell after weaker-than-expected revenue forecast for the upcoming quarter.
Investors are paying more attention to forward guidance because they expect second-quarter earnings to be the “trough” and want to see improvements later in the year, explained Edward Jones strategist Angelo Kourkafas.
Major indexes rose in ordinary trading. The S&P 500 advanced 0.28%, the Nasdaq Composite rose 0.61% and the Dow Jones Industrial Average notched its 12th day of wins with a 0.08% increase.
One non-tech highlight is General Electric, which rallied 6.27% to hit a 52-week high on the back of better-than-expected earnings. In fact, GE has performed better than most tech stocks this year. Its shares have risen 72.4%, compared with 45.5% for Microsoft and 37.8% for Alphabet, CNBC’s Scott Schnipper and Michael Bloom noted.
Meanwhile, Visa also exceeded expectations on both earnings and revenue. Visa CEO Ryan McInerney commented that “consumer spending remained resilient.” Indeed, consumer confidence, as measured by The Conference Board, touched its highest level since July 2021.
The good news: Taken together, they suggest the U.S. economy will continue to be supported by consumer spending. The bad: The Federal Reserve might want to raise interest rates more to suppress demand further. We won’t have to wait long to find out. The Fed announces its decision — and more importantly, reveals its thinking — later today.