U.S. markets were dismal on Wednesday as Microsoft (MSFT, Financial) and Meta (META, Financial) struggled to lift investor sentiment despite surpassing Q1 estimates. Mixed U.S. economic data further clouded the outlook for the Federal Reserve's upcoming decision moves. Declines in the S&P 500 and Nasdaq contracts mirrored this trend, as investors became more cautious before the Federal Reserve released its data and as more market heavyweights, including Apple (APPL, Financial) and Amazon (AMZN, Financial), prepared to release their numbers.
Microsoft Corp's shares fell more than 3% in premarket trading as it lowered its forecast for cloud sales growth next year. Like the AI Stock effect, Meta's shares slid as Zuckerberg affirmed that major investing in AI would persist, negating the short-term revenue expectations.
The U.S. economic landscape showed varied signals on a broader scale. Real GDP increased at a 2.8 percent annual rate, slightly below consensus expectations. ADP employment data that exceeded forecasts reflect the biggest gain in 15 months. Also, the number of existing homes under contract increased sharply, exceeding the analysts' forecast, further strengthening the housing market.
These are economic data the market needs as it tries to assess the ramifications of the Fed's decision to cut rates in a bid to cool down a hot economy and avoid probable economic sluggishness. Current market odds are indicative of a 25 bps rate cut in the next Fed meeting, surveying the prevailing expectations of a steady, accommodative monetary policy in an environment of global economic risks.
