Investing.com — US stock futures point to a positive start on Wall Street on Friday, with traders assessing earnings from megacap technology groups and looking ahead to the October nonfarm payrolls report. Apple shares (NASDAQ:AAPL) dip in premarket dealmaking after the iPhone maker unveils a cautious outlook for the current quarter. Meanwhile, Amazon (NASDAQ:AMZN) reports better-than-expected quarterly revenue and says it is starting to reap the rewards from solid demand for its artificial intelligence operations, sending shares higher prior to the opening bell.
1. Futures edge higher
US stock futures hovered above the flatline on Friday, with investors parsing through more results from Big Tech names and gearing up for the release of the all-important monthly jobs report.
By 04:35 ET (08:35 GMT), the Dow futures contract had risen by 54 points or 0.1%, S&P 500 futures had added 13 points or 0.2%, and Nasdaq 100 futures had increased by 77 points or 0.4%.
The main indices on Wall Street fell across the board in the prior session, dragged down in particular by shares in Facebook-parent Meta Platforms (NASDAQ:META) and software giant Microsoft (NASDAQ:MSFT). Both of the firms delivered better-than-anticipated quarterly returns, but markets fretted over their plans to expand spending on artificial intelligence.
With the tech industry’s largest players currently engaged in a race to build out their AI capabilities, some traders have begun to raise concerns over when the soaring expenditures will yield a pay out and how these costs could impact recently sizeable margins.
2. Apple’s cautious outlook
A parade of corporate earnings this week marched on overnight, highlighted by the release of figures from iPhone-maker Apple and e-commerce titan Amazon (more below).
In a potential sign of caution ahead of the key holiday trading period, California-based Apple unveiled a current-quarter revenue outlook in the low- to mid-single-digits, missing the top-end of Wall Street estimates.
The company added that it expects to see double-digit growth in its services unit in the fiscal first quarter, a statement that prompted some analysts to ask if that means hardware sales could drop during the period. Apple executives did not specifically speak to this question, although CEO Tim Cook said customers are downloading the new AI-enhanced version of the iPhone’s operating system twice as fast as they had a year earlier.
Cook said the feedback from consumers and developers about the firm’s “Apple Intelligence” AI features has been “great.” Strategists have speculated that Apple Intelligence could drive a wave of iPhone users moving to upgrade older devices, potentially reinvigorating recently tepid demand.
Shares in Apple edged lower in premarket US trading on Friday, even though its fourth-quarter results still topped projections. Adjusted earnings per share came in at $1.64 on revenue of $94.93 billion, compared with forecasts of $1.60 and $94.4 billion, respectively.
3. AI demand powers spike in Amazon revenues
Amazon posted an 11% jump in overall quarterly revenues versus a year ago to $158 billion, outpacing Wall Street estimates, as the e-commerce behemoth said it is benefiting from “once in a lifetime” opportunities from so-called generative AI.
CEO Andy Jassy said Amazon Web Services — the group’s key cloud computing segment — was experiencing a particular boost, adding that its AI operations were already seeing “triple-digit” growth. Sales at AWS spiked by 19% to $27.5 billion.
The boom in enthusiasm around AI has led many businesses to start shelling out more cash on the cloud computing capacity needed to underpin the nascent technology. The surge in demand, however, has also contributed to a massive rush in capital expenditures by Amazon on data centers and networking equipment.
Jassy estimated Amazon would spend $75 billion this year and even more in the next, saying the company is “aggressively pursuing” AI.
Shares in Amazon, which have soared by over 24% so far this year, rose in premarket trading.
4. NFPs ahead
Elsewhere on Friday, investors will have the chance to sift through the US jobs report for October.
Economists are estimating that nonfarm payrolls slipped to 106,000, down from 254,000 in the prior month, while the unemployment rate is tipped to match August’s pace of 4.1%. Average hourly earnings growth is also seen slowing to 0.3% on a month-on-month basis.
Analysts have been curious to see if the numbers will be impacted by recent devastating hurricanes and ongoing labor actions.
Separate economic data this week have shown that private payrolls were stronger than anticipated in October, while the amount of Americans filing for first-time unemployment claims dipped to a five-month low. A resilient labor market picture, along with inflation that seems to be on a downward path, have combined to bolster consumer spending — a crucial driver of the US economy.
Following the figures, markets have largely stuck to bets that the Federal Reserve will roll out more interest rate reductions at its final two meetings this year.
Meanwhile, the numbers will be some of the final economic indicators Americans will receive before the Nov. 5 presidential election. Polls point to a tight race, with the state of economy front of mind for many voters.
5. Oil rises
Oil prices rose Friday, paring some of the week’s losses, on raised geopolitical tensions in the Middle East following reports that Iran was preparing a retaliatory strike on Israel.
By 04:35 ET, the Brent contract climbed 2.7% to $74.76 per barrel, while U.S. crude futures (WTI) traded 2.9% higher at $71.27 per barrel. Both contracts are on track to fall around 2% this week, after slumping more than 6% on Monday on the reduced risk of a wider Middle East conflict.
Iran is preparing to attack Israel from Iraqi territory in the coming days, Axios reported on Thursday, citing Israeli intelligence, in response to Israel’s strike against Iran on Oct. 26.
Also impacting sentiment was the release of data in China, which showed manufacturing activity in the top oil importer swung back to growth in October, according to a private-sector survey, echoing an official report published earlier in the week.