Top 5 Things to Know in the Market on Friday

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Top 5 Things to Know in the Market on Friday
Credit: © Reuters.

Investing.com - Here are the top five things you need to know in financial markets on Friday, October 26:

1. GDP expected to add to confidence in U.S. economic strength

Investor attention will be centered Friday on the publication of the U.S. third-quarter gross domestic product at 8:30 AM ET (12:30 GMT).

Analysts’ estimates put expected growth at 3.3% that, while slower than the 4.2% expansion seen in the prior quarter, would put the U.S. economy on track to post its best annual expansion in 13 years.

Also on the economic docket, the University of Michigan will release its revised reading of consumer sentiment for October.

2. Amazon, Google earnings cast shadow on stocks

Risk appetite soured after poor results from tech giants Amazon (NASDAQ: AMZN ) and Alphabet (NASDAQ: GOOGL ) pummeled market sentiment.

Shares in the online retailer crashed more than 10% in pre-market trade on Friday after its third-quarter sales missed consensus and it forecast holiday season sales and profit that missed Wall Street targets.

Meanwhile, the parent company for Google saw shares sink nearly 6% in extended trading after it reported worst-than-expected revenue. Ad sales growth slowed to 20% from 24%.

3. Tech earnings put global stocks on track for worst losing streak in 5 years

The disappointing numbers from Amazon and Alphabet sent waves through global equity markets on Friday, with the MSCI All-Country World Equity Index, which tracks shares in 47 countries, set for its fifth straight week of losses, its worst losing streak since May 2013.

U.S. futures pointed to a sharp drop at the open with tech stocks leading the decline. At 5:48 AM ET (9:48 GMT), the blue-chip Dow futures fell 286 points, or 1.15%, S&P 500 futures lost 39 points, or 1.45%, while the Nasdaq 100 futures traded down 180 points, or 2.60%.

Enthusiasm from Wall Street’s rally on Thursday, that had returned the Dow to positive territory for the year, quickly evaporated in Asia on the back of tech earnings, sending equities in the region to 20-month lows overnight.

European shares also joined in risk-off sentiment as disappointing earnings in the region added to pessimism over U.S. tech stocks.

4. Intel provides some optimism as earnings season nears halfway mark

Not all U.S. tech earnings were negative as Intel (NASDAQ: INTC ) provided a ray of hope after reporting better-than-expected quarterly numbers and giving an upbeat forecast for the current quarter that also topped expectations.

As of Thursday’s close, 229 of the S&P 500 companies had reported third-quarter numbers and 81% beat earnings estimates on 26.5% growth, while 61% topped sales forecasts on 9.0% growth.

Friday will be a comparably light day at the close of the busiest week for third-quarter earnings reports. Colgate-Palmolive (NYSE: CL ), Weyerhaeuser (NYSE: WY ), Phillips 66 (NYSE: PSX ) and Rockwell Collins (NYSE: COL ) are among the handful of companies reporting ahead of the opening bell.

5. U.S. crude heads for sharp weekly decline ahead of data on U.S. oil rigs

Oil prices registered a sharp decline on Friday after Saudi Arabia warned of oversupply and while investors looked ahead to the latest reading on U.S. drilling activity.

U.S. crude oil futures lost 1.56% to $66.28 by 5:52 AM ET (9:52 GMT), while Brent oil traded down 1.31% to $75.88.

"The market in the fourth quarter could be shifting toward an oversupply situation as evidenced by rising inventories over the past few weeks," Saudi Arabia’s OPEC governor Adeeb Al-Aama told Reuters on Thursday.

After many months of concern about shortage of supply ahead of U.S. sanctions on Iran, due to begin on Nov. 4, the oil market is beginning to be concerned about possible oversupply and inventories that are rising in many parts of the world.

In that light, investors will pay close attention to the weekly rig count data from Baker Hughes at 1:00 PM ET (17:00 GMT). Last Friday’s data, an early indicator of future U.S. output, rose by four to 873, the highest since March 2015.

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