Investing.com - Here are the top five things you need to know in financial markets on Tuesday, April 30:
1. Google revenue slowdown weighs on tech
Google’s parent-company Alphabet (NASDAQ:GOOGL) saw its shares plunge nearly 8% in premarket trade Tuesday after the company reported quarterly earnings.
The internet giant registered its slowest revenue growth in three years due to increased competition in advertising and challenges at YouTube, where it is struggling to assure clients that their ads don’t sponsor adult or offensive content.
Alphabet said its revenue rose 17% in the first quarter to $36.3 billion, missing forecasts for $37.3 billion and well below a 26% annual increase seen in the first three months of 2018.
That put downward pressure on other tech stocks, with Nasdaq 100 futures off 0.2% compared to flat readings in Dow futures and S&P 500 futures.
Markets will have more heavyweight tech earnings to digest today as Apple (NASDAQ:AAPL) reports after the market close. Outside the tech sector, General Electric (NYSE:GE), Mastercard (NYSE:MA), McDonald’s (NYSE:MCD), Merck (NYSE:MRK)and Pfizer (NYSE:PFE) are among company earnings to watch ahead of the opening bell.
Read more: Apple’s Q2 Earnings: Growth In Services Unit Is Crucial To Sustain Rally - Haris Anwar
2. China reports weak factory activity ahead of trade talks
Factory activity in China expanded at a slower pace than forecast in April, suggesting that fiscal and stimulus measures aimed at reviving the economy haven't been entirely successful yet.
China’s manufacturing purchasing managers’ index dropped to 50.1 this month, holding just above the 50-mark that separates expansion from contraction. Economists had forecast an increase to 50.7.
The weaker-than-expected reading arrived as U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer arrived in Beijing for another round of trade negotiations with Chinese Vice Premier Liu He that will continue next week in Washington D.C.
Mnuchin said Tuesday that he hopes to make “substantial progress” this week and next, without giving further details.
U.S. President Donald Trump said last week that he would soon host Chinese President Xi Jinping at the White House. A meeting between the two leaders would likely see them signing off on an agreement to end a dispute over tariffs and market access.
3. Fed kicks off policy meeting amid consumer, housing data
The Federal Reserve begins its two-day meeting on Tuesday amid expectations that interest rates will remain on hold. At its March meeting the Fed indicated that it will hold off from hiking rates for the rest of the year amid expectations for a slower pace of economic growth.
Although data released last week showed that growth in the U.S. economy unexpectedly accelerated in the first quarter, the expansion was boosted by gains in trade and inventories which may be transitory. The core private consumption price index, generally considered to be the Fed’s preferred inflation indicator, cooled off in March, supporting arguments for a pause in policy tightening.
Fed Chairman Jerome Powell will hold a press conference after the meeting ends on Wednesday.
Also on Tuesday’s economic calendar, markets will gauge the latest reading of consumer strength with the Conference Board’s consumer confidence index for April.
In the housing market, S&P/Case-Shiller will release their house price index for February while the National Association of Realtors will publish its report on pending home sales in March.
4. Trump sues Deutsche Bank and Capital One
U.S. President Donald Trump, along with his three eldest children - Donald Jr., Eric and Ivanka - and seven of his companies, filed a federal lawsuit against Deutsche Bank (DE:DBKGn) and Capital One (NYSE:COF) in an attempt to prevent the banks from responding to congressional subpoenas.
The subpoenas represent a tightening of Congressional scrutiny of the president, who famously broke with tradition by not publishing his income tax returns during the 2016 campaign. The lawsuit claims that record requests from Democrat-controlled House committees serve no legitimate or lawful purpose.
"The subpoenas were issued to harass President Donald J. Trump, to rummage through every aspect of his personal finances, his businesses, and the private information of the President and his family," the lawsuit said.
5. Major Boeing customer threatens switch to Airbus
In the wake of two fatal accidents that grounded Boeing’s (NYSE:BA) 737 MAX jets, one of the company’s major customers has threatened to order aircraft from its rival Airbus (PA:AIR).
Flydubai Chief Executive Sheikh Ahmed bin Saeed al-Maktoum said that he would seek compensation for the grounding of 14 737 MAX planes and may seek replacements from Airbus, according to a report from Financial Times.
Boeing is struggling to present a software fix and new pilot training package that will convince regulators that the plane is safe to fly. The company admitted on Monday that a cockpit alert notifying pilots of a sensor malfunction did not work as presented. The warning only functioned on a separate indicator panel that was available for a fee.