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MORNING SQUAWK

1. Time to call IT

Stocks were on a roll heading into Wednesday. The major U.S. indices had another big day Tuesday, extending equities’ winning streak to three days. But then a couple major tech companies reported quarterly results (more on that below), and all of a sudden a pretty solid earnings season started to look a little more sketchy. There are more Big Tech earnings to come this week, too: Facebook parent Meta is on deck to report after the bell Wednesday, and Apple and Amazon go Thursday. Read live market updates here.

2. Cloudy outlook from Microsoft

Microsoft beat on the top and bottom lines when it reported quarterly results Tuesday, but weak cloud revenue and underwhelming guidance weighed on the tech giant’s shares in off-hours trading. Wall Street had expected the pace of public cloud business Azure’s revenue growth to slow in the quarter, but it came in lower than projections, and not just because consumption growth moderated. Chief Financial Officer Amy Hood said energy costs weighed on Azure’s gross margin, another example of how inflation is taking a toll on pretty much everything.

3. Google's ad problems

Alphabet, the other tech behemoth to report earnings Tuesday, didn’t fare much better with investors as it confirmed broader fears about the online ad market. The Google parent said YouTube’s advertising revenue fell about 2% year over year, while Wall Street was expecting a 3% increase. While overall ad revenue for Alphabet rose slightly in the quarter, the company saw lower spending in search advertisements for categories such as mortgages, which is suffering from declining demand due to rising rates (see below), and cryptocurrency, which has experienced a sharp downturn this year along with other markets.

4. Mortgage demand withers

Demand for mortgages has fallen to the lowest level in 25 years thanks in large part to surging interest rates, according to the Mortgage Bankers Association. The rate for the most popular mortgage, the 30-year fixed, is hovering above 7% after starting the year around 3%. The rapid turnaround, which came after years of low rates and easy money from the Federal Reserve, cooled what had become a super-hot market over the first two years of the Covid pandemic, as Americans scooped up homes in the suburbs and exurbs. While prices are still higher than where they were a year ago, the pace of increases has cooled off dramatically as rates scare off sellers, buyers and builders alike.

5. 'The heaviest of battles'

Ukrainian officials said Russian forces are gathering strength and numbers in the southern port city of Kherson. Ukraine’s military has for weeks now routed the Russian military in the south and the east, seizing back territory Russia claimed during the earlier days of the war. Now Kherson is shaping up to be a major flashpoint in this phase of the fight. “It means that nobody is preparing to withdraw,” an advisor to Ukraine President Volodomyr Zelenskyy said, referring to Russia’s recent moves. “On the contrary, the heaviest of battles is going to take place for Kherson.” Read live war updates here.

– CNBC’s Sarah Min, Jordan Novet, Jennifer Elias, Diana Olick and Natasha Turak contributed to this report.

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