Daily Investment Strategy
U.S. stocks end flat on Wednesday
U.S. stocks fell as technology stocks fell after Microsoft warned of slowing sales, raising concerns about a worsening economic outlook. Microsoft's softness also affected the performance of other software and cloud computing stocks such as Amazon, Adobe and Alphabet on the day, but the market later digested the news and recovered the lost ground. Separately, geopolitical worries also weighed on stocks amid fears that a decision by Germany and the United States to supply Ukraine with tanks could trigger an escalation of the war between Russia and Ukraine. The Dow Jones Industrial Average edged up 0.03%, the S&P 500 edged down 0.02%, and the Nasdaq Composite lost 0.2%.
Investors continue to digest a slew of quarterly results ahead of a key inflation report due Thursday
Microsoft reported second-quarter revenue of $52.75 billion, below the consensus estimate of $52.93 billion. Microsoft forecast third-quarter revenue of $50.5 billion to $51.5 billion, while analysts polled by Refinitiv had expected $52.43 billion. Microsoft expects third-quarter sales for its Azure cloud computing business to slow by 4 or 5 percentage points from the second quarter. On the other hand, Tesla announced its quarterly results after the market closed. Its 4Q profit increased by 12% quarter-on-quarter, which is higher than Wall Street expectations. Net income for the quarter was $3.7 billion, up from $3.3 billion in the third quarter. For the full year, Tesla's profit more than doubled to $12.6 billion from $5.5 billion in 2021. Sales rose to $81.5 billion from $53.8 billion the previous year. Tesla said it expects to produce 1.8 million vehicles by 2023.
After being closed for five consecutive days, the Hong Kong stock market will open as usual from today, and the southbound trading of Hong Kong Stock Connect will continue to be closed this week.
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