Global stocks rally as investors scent a Fed shift on tightening, but US futures sag after Meta earnings miss

Global stocks rally as investors scent a Fed shift on tightening, but US futures sag after Meta earnings miss
Meta CEO, Mark Zuckerberg.Drew Angerer/Getty Images
  • Global stocks gained Thursday thanks to hopes the Federal Reserve could slow the pace of rate hikes.
  • But US equity futures slipped after Meta's earnings miss and Mark Zuckerberg warned of economic slowdown.

Global stocks rose Thursday as investors focused on hints from Jerome Powell that the Federal Reserve could set a more measured pace for interest rate hikes.

But US stock futures slipped after Meta Platforms CEO Mark Zuckerberg warned of an economic downturn in the Facebook parent's earnings call.

As expected, the Fed raised interest rates by 75 basis points Wednesday. But Powell, chair of the US central bank, said its decisions on policy will be driven by data in the future — a shift that suggests the Fed could pause or slow its tightening if economic indicators worsen significantly.

That offered a glimmer of hope to investors concerned that aggressive Fed rate hikes will lead to a downturn or recession in the US.

The MSCI World Index put on 0.37%. In Europe, the pan-continental Stoxx 600 was up 0.29%. But Paris's CAC 40 tipped 0.05% lower, as Frankfurt's DAX 40 fell 0.19% and London's FTSE 100 slid 0.18%.


In Asia, the Shanghai Composite closed 0.21% higher, though Hong Kong's Hang Seng slid 0.23%. Tokyo's Nikkei 225 closed 0.36% lower.

But US stock futures were trading lower in European trading, signaling a pullback at the open from a strong prior session, which saw the S&P 500 finish 2.62% in the green after Powell's comments.

Nasdaq futures were 0.75% lower, while S&P 500 futures fell 0.32%. Dow Jones Industrial Average futures held a little firmer but slipped 0.13%.

"Equity futures are looking to take stock today after such big moves. There may be a bit of profit taking when US markets reopen later," ING Economics' head of research Robert Carnell said.

Meta's disappointing second-quarter earnings report and Zuckerberg's warning of an economic pullback ahead were also weighing on sentiment, according to analysts.


The Facebook parent's quarterly revenue missed targets, and its earnings came in at $2.46 a share versus the $2.59 expected. The stock was 5.12% lower in premarket trading.

"We seem to have entered an economic downturn that will have a broad impact on the digital advertising business," Zuckerberg said on an earnings call Wednesday.

"It's always hard to predict how deep or how long these cycles will be, but I'd say that the situation seems worse than it did a quarter ago," he added.

Investors are closely tracking this week's stream of earnings reports for signs of US economic weakness, after Snap's warning of a faltering digital ad market last week. Quarterly updates from Apple and Amazon are on the docket Thursday.

Also in focus is the first reading on US second-quarter GDP due later in the day, which could feed into the Fed's approach. An update on its preferred measure of inflation, the PCE Index, is scheduled for release Friday.


"US GDP could well print a second negative quarter this evening, but forecasts vary widely," Oanda senior market analyst Jeffrey Halley said. "Perversely, a negative print will probably see another stock market rally and US Dollar sell-off in the context of the price action overnight. The PCE Index data tomorrow, if it shows signs of waning, could see a rinse repeat."

Here's how other major assets are performing this morning:

  • Brent crude climbed 1.84% to $103.54 a barrel, while WTI crude futures were up 1.92% at $99.13.
  • TTF natural gas futures eased slightly, slipping 1.57% to 202 euros per megawatt hour.
  • US 10-year Treasury yields rose 4.4 basis points to 2.78%.
  • The US Dollar Index, which tracks performance against a basket of currencies, climbed 0.12% to 106.58.
  • The cryptocurrency fightback continued as bitcoin rose 7.51% to just under $23,000, and ethereum added 10.89% to top $1,600.