Investing.com - Here are the top five things you need to know in financial markets on Thursday, July 26:
1. Facebook Set For Worst Day Ever After Grim Forecast
Facebook shares looked set to suffer their worst day on record after the social media giant warned that profit margins would plummet for several years due to the costs of improving privacy safeguards and slowing usage in the biggest advertising markets.
Investors were spooked following commentary from the company that its revenue growth rates could slow by “high-single digits” in the third and fourth quarter. It also cautioned that expense growth was likely to outpace revenue growth next year.
Facebook (NASDAQ:FB), which closed at a record high on Wednesday ahead of the results, plunged roughly 18% to around $180.00 in pre-market trade, wiping out almost $120 billion in market value. It declined as much as 24% earlier, slumping below $170.
If the share drop holds, it would be Facebook's largest single-day decline ever, topping a 12% drop in July 2012.
2. Amazon Earnings In The Spotlight
Investors will be inundated with corporate earnings as 74 members of the S&P 500 are scheduled to report results today, with McDonald’s (NYSE:MCD), Mastercard (NYSE:MA), Comcast (NASDAQ:CMCSA), American Airlines (NASDAQ:AAL), Southwest Airlines (NYSE:LUV), Celgene (NASDAQ:CELG), and Under Armour (NYSE:UA) all releasing earnings before the market open.
But the main event of the day is set to be Amazon (NASDAQ:AMZN), which will report earnings after the closing bell.
According to estimates, Amazon’s earnings per share should total $2.47 while revenues are expected to total $53.37 billion.
Investor focus will be on the company’s performance in its Web Services business, which analysts said will be a major boost to the company’s profitability going forward.
Alongside Amazon’s results after the close will be earnings from Intel (NASDAQ:INTC), Starbucks (NASDAQ:SBUX), Electronic Arts (NASDAQ:EA), Western Digital (NASDAQ:WDC), Expedia (NASDAQ:EXPE), Lam Research (NASDAQ:LRCX), Amgen (NASDAQ:AMGN), and Chipotle Mexican Grill (NYSE:CMG).
3. U.S.-EU Trade War Averted… For Now
President Donald Trump proclaimed the United States and the European Union had launched a "new phase" in their relationship following a meeting with European Commission President Jean-Claude Juncker on Wednesday.
The leaders pledged to expand European imports of U.S. liquefied natural gas and soybeans and both vowed to lower industrial tariffs.
They also agreed to refrain from imposing car tariffs while the two sides launch negotiations to cut other trade barriers, as well as re-examine U.S. steel and aluminum tariffs and retaliatory duties imposed by the EU “in due course.”
Trump, in a late-night post on twitter Wednesday, touted the deal, saying it was "a big day for free and fair trade."
The upbeat remarks helped ease some of the fears of a transatlantic trade war.
4. Nasdaq Futures Take A Tumble
The tech-heavy Nasdaq was set for a big down day, as investors fled the sector following alarmingly grim guidance from Facebook.
At 5:40AM ET, the Nasdaq futures were down 62 points, or 0.8%.
The big-name FANG technology stocks fell in sympathy with Facebook. Amazon lost 1.5% in pre-market hours, Netflix (NASDAQ:NFLX) shed about 2%, while Google parent Alphabet (NASDAQ:GOOGL) slumped 1.5%.
Facebook competitors Twitter (NYSE:TWTR) and Snap (NYSE:SNAP) were also lower, both losing around 3%.
However, the broader market looked to be on sounder footing heading into Thursday.
The blue-chip Dow futures were up 35 points, or 0.1%, while the S&P 500 futures dipped 4 points, or 0.1%, as concerns over rising trade tensions between the U.S. and Europe showed signs of easing.
Elsewhere, European markets rallied, with almost every sector in positive territory. The German DAX was the best performing market, up by 1.3%, while autos and basic resources - which are most sensitive to trade headlines - were the top leading sectors.
Earlier, Asian markets inched up, but weakness in China markets underscored persistent worries about the outlook for global growth.
5. Dollar Inches Up Ahead Of Durable Goods Data
Away from equities, the U.S. dollar was a shade higher, as investors looked ahead to the latest batch of U.S. economic data for further clues on when and how fast the Federal Reserve will raise interest rates.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.1% at 94.10.
Elsewhere, in the bond market, U.S. Treasury prices ticked lower, pushing yields higher across the curve, with the benchmark 10-year yield rising to around 2.97%, while the Fed-sensitive 2-year note was near 2.67%.
Economic data set for release on Thursday include the June report on durable goods orders, which are expected to rise 3.0% from the prior month.
The weekly report on initial jobless claims is also due, as well as wholesale inventories for June, and the Kansas City Fed’s manufacturing activity index for July.
In addition to the U.S. data, the immediate currency market focus was on the European Central Bank's policy decision due at 7:45AM ET.
With the ECB widely expected to keep policy on hold, investors will study comments by President Mario Draghi for any references to the pace of policy normalization.
The euro was slightly lower against the dollar at 1.1710 (EUR/USD).