Investing.com -- Alphabet and Microsoft shares rise after the tech giants unveil resilient returns, while Meta Platforms waits on deck. But First Republic Bank stock extends declines as regulators and financiers fret over the prospect of further propping up the ailing bank.
1. U.S. futures higher after Microsoft, Alphabet earnings
U.S. stocks are seen opening in the green on Wednesday following earnings from Microsoft and Google-parent Alphabet that underlined the resilience of the core businesses at both companies.
By 05:06 ET (09:06 GMT), the Dow futures contract was up 37 points or 0.11%, S&P 500 futures traded 17 points or 0.42% higher, and tech-heavy Nasdaq 100 futures gained 165 points or 1.29%.
Underpinning these expected gains were shares in Microsoft, which rose sharply in postmarket trading.
Microsoft's (NASDAQ:MSFT) key intelligent cloud division posted $22.1 billion in revenue in the first quarter of 2023, an uptick of 16% compared to the same period last year. The top-line result at the unit, which includes the group's crucial Azure public cloud computing platform, beat Bloomberg consensus estimates of $21.89B.
Quarterly advertising revenue at Alphabet (NASDAQ:GOOG), meanwhile, slipped slightly to $54.55B, although the drop was less than analysts had feared.
The returns fuelled hopes that demand for digital services - a booming industry during the pandemic - is holding up in the face of a potential economic downturn.
2. Meta up next
The parade of tech results continues on Wednesday, with Facebook-owner Meta Platforms Inc. (NASDAQ:META) due to report after the close of U.S. trading.
Chief executive Mark Zuckerberg has already unveiled rounds of sweeping job cuts and cost reductions in recent months as part of what he has called a "year of efficiency."
Investors will be keen to see just how much these belt-tightening measures are impacting the firm's overall performance. Bloomberg consensus projections see earnings per share for the opening three months of the year coming in at $2.01 on revenue of $27.67B. Sales have dropped over the last three straight quarters.
Focus is also expected to turn to Zuckerberg's plans for artificial intelligence. Meta has poured billions of dollars into building its so-called "metaverse" business, which Zuckerberg argues will be a key driver of customer activity in the future.
Other big corporate names set to report today include planemaker Boeing (NYSE:BA) and cloud software firm ServiceNow (NYSE:NOW).
3. First Republic on the ropes
Shares in First Republic (NYSE:FRC) dropped yet again on Tuesday, slumping by nearly 50%, as lawmakers and bankers across the U.S. raced to find a solution to shore up the embattled California lender.
On Monday, San Francisco-based First Republic said that its customers had withdrawn $100 billion during the crisis in the financial services sector in March that was sparked by the collapse of Silicon Valley Bank.
First Republic moved to reassure investors, saying it will reduce headcount and pursue "strategic options" to reinforce its capital position. However, multiple media reports suggested that analysts remained uncertain if the bank still had the ability to find a solution at this point.
First Republic has reportedly reached out to the U.S. government, with officials keen to reassure the American public that last month's turmoil was a one-off incident and not a sign of deeper issues in the banking system. Bailing out a lender known for catering to the wealthy, however, could expose regulators to criticism.
Meanwhile, big banks on Wall Street, many of whom have already participated in a $30 billion deposit injection into First Republic, may be wary to further strengthen these ties.
First Republic stock has now plummeted by over 94% over the past one-year period. The shares were trading at around $115 as recently as March 8.
4. Deadline day for U.K. CMA's final ruling on Microsoft/Activision deal
Microsoft's planned $75B purchase of video game maker Activision Blizzard (NASDAQ:ATVI) could soon take another step towards clearing its remaining regulatory hurdles.
The U.K. Competition and Markets Authority is due to release its final report on the takeover on Wednesday, a little over a month after it delivered a surprise reassessment of the acquisition.
Citing "new evidence," the CMA said that the move will not create a "substantial lessening of competition in relation to console gaming in the U.K." The CMA's announcement was a reversal from a prior statement in February which pointed to "competition concerns" raised by an extensive investigation.
At the heart of the matter is Activision's ultra-popular shooting game "Call of Duty." Regulators have worried that Microsoft could effectively eliminate its competitors who also publish the title by making it exclusive to its own consoles. But the CMA noted that, according to the fresh evidence, this strategy would actually be "significantly loss-making" for Microsoft. It added that Microsoft would thus likely have the incentive to make the game available on other platforms, specifically ones developed by rival Sony's (NYSE:SONY) PlayStation.
U.K. authorities are still looking into how cloud gaming will impact the deal, an issue also being examined by European Union regulators. The final barrier facing the deal comes from the U.S. Federal Trade Commission, which filed to block it in December.
5. Oil gains as U.S. inventories drop
Oil prices climbed on Wednesday after sharp losses in the previous session, as a dip in U.S. fuel inventories pointed to resilient demand in the world's biggest oil importer.
Data from the American Petroleum Institute, cited by Reuters, showed that crude inventories in the U.S. declined by a little over 6 million barrels last week, above expectations of 1.7 million barrels. Gasoline inventories also decreased to 1.9 million barrels, while distillate inventories rose by 1.7 million barrels.
Official stockpile data will be released by the U.S. government later today. Inventories have been moving lower since the middle of March, in a sign that refineries may be ramping up output before the peak summer demand season.
By 05:00 ET, U.S. crude futures traded 0.91% higher at $77.77 a barrel and the Brent contract edged up by 0.73% to $81.19 per barrel.