Wall St set to rebound from tech selloff as Microsoft, Visa gain

U.S. stocks were set to open higher on Wednesday on strong earnings updates from Microsoft and Visa, following a brutal selloff in the previous session that sent the tech-heavy Nasdaq to its lowest close since December 2020.

Growing fears of a global economic slowdown and more aggressive Federal Reserve pummeled technology and growth stocks on Tuesday, with Tesla (NASDAQ:TSLA)’s 12% slump weighing the most on the S&P 500 and the Nasdaq.

Tesla inched up 0.6% amid concerns that Chief Executive Elon Musk may have to sell shares to fund his buyout of Twitter Inc (NYSE:TWTR).

Microsoft Corp (NASDAQ:MSFT) jumped 3.1% after it forecast double-digit revenue growth for the next fiscal year, driven by demand for cloud computing services, while Visa Inc (NYSE:V) rose 5.8% after the payments network said it expects revenue to accelerate past pre-pandemic levels.

However, Google-parent Alphabet (NASDAQ:GOOGL) Inc fell 4.2% as slowing YouTube ad sales led the company to report quarterly revenue below expectations and Boeing (NYSE:BA) Co dropped 3.8% after it disclosed $1.5 billion in abnormal costs from halt to 777x production.

Nearly a third of the companies on the S&P 500 report results this week. Facebook-owner Meta Platforms Inc, which publishes quarterly earnings after market close, fell 3.6%.

“In a sea of negative news, there is an underlying positive. This earnings season has been really solid, Microsoft numbers further show pretty strong demand and a fairly positive corporate outlook,” said Ryan Detrick, chief market strategist at LPL Financial (NASDAQ:LPLA).

“So as volatile as the stock market has been, we are encouraged that the likelihood of a recession this year is still very minor.”

Megacap growth stocks have been battered since the start of the year as investors fear about the impact of higher interest rates, inflationary pressures, geopolitical tensions and China’s COVID-19 led lockdown on the global economic outlook.

The tech-heavy Nasdaq has shed 20.2% so far this year, while the benchmark S&P 500 is down 12.4%.

Nevertheless, overall earnings have been better than expected. Of the 134 companies in the S&P 500 that reported earnings through Tuesday, 80.6% of them have exceeded Wall Street expectations. Typically, only 66% of companies beat estimates, according to Refinitiv data.

At 08:28 a.m. ET, Dow e-minis were up 219 points, or 0.66%, S&P 500 e-minis were up 14 points, or 0.34%, and Nasdaq 100 e-minis were up 13 points, or 0.1%.

Among other movers, toymaker Mattel Inc (NASDAQ:MAT) climbed 12.2% after a source told Reuters it was exploring a sale.

Audio streaming platform Spotify Technology SA (NYSE:SPOT)’s U.S.-listed shares tumbled 7.3% even as it reported quarterly revenue that beat analysts’ estimates on higher advertising income.