Investors Spooked by Google-Alphabet’s Cost Cutting Efforts While Reporting Glitch in Freshly Minted AI Software

Stock futures are gaining this European Thursday afternoon, after a down day for U.S. markets Wednesday. U.S. benchmarks are mainly up, with contracts tied to the S&P 500 gaining 0.4% as of noon CET, and those following the Nasdaq Composite rising 0.5%. The tech-heavy Nasdaq lost 1.7%, after Google parent Alphabet (GOOG, GOOGL) disappointed investors following a glitch on its new artificial intelligence software, causing its stock to plummet 7.4% (more below).

One key data point to watch, given the intense focus on the labor market: Jobless claims, due at the U.S. market open. They are expected at 190,000 for the week ended Feb. 4, up from 183,000 a week earlier.

Corporatewise, Wall Street expects PepsiCo (PEP) to report quarterly earnings of $1.65 a share on sales of $26.84 billion before the opening bell. PepsiCo shares rose 0.9% to $172.61 in today’s premarket. The Walt Disney Company (DIS) reported better-than-expected Q1 results. The company also said it would reorganize into three separate entities with the goal of cutting $5.5 billion in costs. Disney shares rose 5.4% to $117.84 in after-hours trading.

As we mentioned above, many investors will likely be keeping an eye on Alphabet (GOOG, GOOGL), after Google's parent company sank 7.7% yesterday on concerns about its nascent AI chatbot, Bard. Elsewhere, investors expect Kellogg Company (K) to post sales of $3.66 billion and earnings per share of $0.84 in the latest quarter. The company is due to release earnings before the market opens. Kellogg shares rose 0.1% to $67.23 in premarket. Also, investors expect PayPal Holdings (PYPL) to post quarterly earnings at $1.20 per share on revenue of $7.39 billion after the closing bell. PayPal shares gained 0.4% to $80.00 in premarket.

European stocks rallied today after German inflation came in lower than expected. Inflation in the eurozone’s largest economy in January showed a 9.2% rise YoY, which was below economists’ expectations. At the time of writing, the benchmark Stoxx 600 rose 1.13% and Germany’s DAX climbed 1.55%. The French CAC 40 index gained 1.44% while the euro was up 0.47% against the dollar. The British FTSE 100 rose 0.76% concurrently, while the Pound sterling gained 0.56% against the dollar. Shares of Credit Suisse (CS) plunged as much as 10% following the release of its latest earnings report, in which the company hinted that 2023 would be a more challenging year in light of 2022 financial results.

In Asia, Indian shares struggled for direction before closing marginally nasdhigher earlier today, as gains in high-weightage financials and tech stocks were overshadowed by concerns over further rampant interest rate-hike trajectory and a slide in Adani Group stocks. According to Bloomberg, most Chinese provinces expect income growth to pick up as the economy recovers, though the need for more economic support poses a risk to their balance sheets, according to the state-run Securities Times newspaper. At least 26 of China’s 31 provincial-level jurisdictions expect their public budget revenue, which includes taxes, to grow 5% or more in 2023.