Microsoft Earnings Fall Short as Walmart Spooks Crypto Investors

Key Insights:

• Microsoft misses Q4 earnings estimates, with an EPS of $2.23 versus $2.29.
• The company attributed the miss to unfavorable foreign currency movements.
• However, the market reaction to the miss was muted, with Walmart Inc. hitting riskier assets.

Throughout 2022, the crypto market has closely tracked the NASDAQ 100.

Crypto investor sentiment towards the US economic outlook and monetary policy has led to the correlation between the NASDAQ and the crypto markets.

Uncertainty ahead of the Fed monetary policy decision, due later today, has tested support for riskier assets this week.

Movements across the NASDAQ 100 and the broader crypto market have reflected the uncertainty.

Away from the economic calendar and the Fed, corporate earnings are also a consideration for investors as the interconnectedness grows.

This week, several US bluechip companies are in the spotlight, with corporate earnings results likely to draw plenty of interest and dictate appetite for riskier assets.

Walmart Inc. Outlook Mutes Disappointing Microsoft Earnings Impact

On Tuesday, Microsoft (MSFT) released its earnings results for the June 30, 2022, quarter end.

Key results included,

• Revenue was $51.9 billion, up 12.6% compared with the quarter ended June 30, 2021.
• Operating income was $20.5 billion, up 8%.
• Net income was $16.7 billion, up 2%.
• Diluted earnings per share was $2.23, increasing 3% when compared to the quarter ended June 30, 2021.

The results missed forecasts, with analysts forecasting earnings per share to increase to $2.29.

Microsoft cited several factors that contributed to the risk, including unfavorable foreign exchange movement within the quarter that impacted revenue ($595 million) and diluted earnings per share ($0.04).

Other contributory factors included,

• Extended production shutdowns in China
• Reduction in advertising spending.
• The ongoing war in Ukraine.
• Employee severance expenses.

Despite the earnings miss, Microsoft shares were up in extended trading, supported by a positive outlook for the year ahead.

For FY2023, Microsoft stuck to its previous forecast, saying,

“We continue to expect double-digit revenue and operating income growth in constant currency and in US dollars.”

However, the earnings miss and the positive outlook had a relatively muted impact on the NASDAQ 100 and the crypto market.

Doom and gloom from Walmart Inc. weighed on riskier assets.

On Tuesday, Walmart (WMT) spooked the markets with a grim outlook for current quarter and the full year. Shares tumbled by 7.64% to $121.9 after the company said that higher prices for fuel and food would cause consumers to cut back on spending.

Walmart shares are up just 0.10% in extended trading. The doom and gloom outlook left the NASDAQ 100 down 1.87%, with Amazon.com (AMZN) and others responding to the Walmart warning.

Crypto Market Responds to Walmart Warming and Microsoft Outlook

Movement across the crypto market closely tracked the Walmart share price through the US session.

A late partial recovery from day lows supported a crypto market recovery, with extended trading hours delivering support.

While Walmart is up just 0.10% in extended trading, Microsoft is up 5%, supported by the positive earnings outlook.

At the time of writing, bitcoin (BTC) was down 0.95% to $21,105.