Nvidia, Tesla, Alphabet Drag Stock Market Lower | Wall Street Today
Magnificent Seven stocks dragged the rest of the stock market lower amid speculation investors are rotating out of this year's biggest gainers and rolling into equities whose strong fundamentals have been overshadowed by the artificial intelligence (AI) frenzy.
The $S&P 500 Index (.SPX.US)$ fell 2.3% to close at 5,427.13, while the $Nasdaq Composite Index (.IXIC.US)$ lost 3.6% to 5,427.13. The two major indices had their worst daily performance since 2022 on Tuesday. The $Dow Jones Industrial Average (.DJI.US)$ slipped 1.3% to 39853.87.
The market got a taste of how generative AI is helping boost revenue for the tech giants after Google's parent $Alphabet-A (GOOGL.US)$ and $Tesla (TSLA.US)$ released earnings and the reaction signaled investors weren't impressed.
MACRO
U.S. manufacturing fell into contraction in July, as business conditions within the good-producing sector deteriorated for the first time since December.
The S&P Global Flash U.S. manufacturing purchasing managers' index (PMI) fell to 49.5 in July from 51.6 a month earlier as new orders, production and inventories declined. Slowing employment growth also dragged the PMI lower.
Weaker manufacturing PMI contrasts with the strength seen in the services sector. The Flash US Services Business Activity Index rose to 56 in July, a 28-month high. That's the fourth straight month that the service sector outperformed manufacturing, with the divergence widening by the most in more than a year.
SECTORS
The $U.S. 2-Year Treasury Notes Yield (US2Y.BD)$ fell to 4.427%, from 4.5% in the previous trading session as U.S. manufacturing weakened. A deterioration in the business conditions in the manufacturing sector may strengthen the case for the U.S. Federal Reserve to start cutting interest rates sooner than anticipated to prevent the economy from slowing.
$Crude Oil Futures(JAN5) (CLmain.US)$ rose as data from the Energy Information Administration showed increasing weekly implied demand for gasoline. The EIA also reported a 3.7-million-barrel decline in U.S. commercial crude inventories, boosting optimism that tightening supply could push the commodity higher.
MOVERS
Tesla led the Nasdaq lower after the electric vehicle maker reported that its second quarter earnings shrank 43% to 55 cents a share in the second quarter from a year earlier, missing the 62-cent average of analysts' estimates compiled by Capital IQ.
(To see Tesla's options chain, click here.)
Tesla's rivals also fell, including $BYD Company ADR (BYDDY.US)$, $Rivian Automotive (RIVN.US)$, $Lucid Group (LCID.US)$, $NIO Inc (NIO.US)$ and $VinFast Auto (VFS.US)$.
$Lamb Weston (LW.US)$ was the biggest decliner on the S&P 500, tumbling 28% after the potato supplier to restaurants reported fiscal fourth quarter earnings that missed estimates. The company's adjusted earnings reached 78 cents, behind the $1.26 expected by analysts surveyed by FactSet.
Alphabet shares slipped after YouTube revenue growth slowed to 13% in the second quarter, missing analysts' estimates that called for an average of 16% increase. Still search revenue increased 14% while that of cloud rose 29%, driven by increased AI investments.
$NVIDIA (NVDA.US)$ shares fell, dragging chipmakers lower amid mounting debate whether investors' portfolios are so heavily dependent on the financial prospects of the Magnificent Seven and semiconductor giants, leaving them vulnerable to a major pullback. $Advanced Micro Devices (AMD.US)$, $Intel (INTC.US)$, $Taiwan Semiconductor (TSM.US)$, $Broadcom (AVGO.US)$, $ASML Holding (ASML.US)$ and $Micron Technology (MU.US)$ declined.
$AT&T (T.US)$ shares gained after the telecommunications giant added more postpaid phone subscribers than analysts expected. It also maintained its full year earnings outlook, helping mute the negative news that its adjusted earnings missed market consensus.
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Simon 5183 : Almost all stocks have plummeted, who is dragging down who? Every snowflake is inextricably linked during an avalanche
Alen Kok : k
104476495 : hi
Northsea9 : To talk for a while is to ask for interest rate cuts at the end of the month or the beginning of next month! For every 0.25 basis point reduction, the overall quarterly profit of the institution increased by 70 billion US dollars! That's almost 300 billion dollars a year! A 1% interest rate cut would be a huge profit! Even if the stock price falls, it's a huge profit! The meaning of Wall Street trading is obvious! It's about driving interest rate cuts through a sharp drop in stock prices! Slowing economic growth! Build momentum for the Democratic Party's Harris! Suppress Trump! All for the big ones! The purpose is to see the six major institutions jointly sell nearly 170 billion dollars of shares!
Shootingstar Northsea9 : May I ask will usd lose its value abit if there is a rate cut?
LittleSoldier : Probably no interest rate cuts this year, let’s be real. The powers at be are incompetent and continue to lie over and over again.
What’s sad is people actually still believe the BS!!
I
TickleMyStocks : Remember Warren Buffett’s advice: be greedy when others are fearful and fearful when others are greedy. Losses are a part of investing; they teach us to rebound better and smarter. We will survive, and the market will recover and thrive. Let’s keep a long-term perspective.
TickleMyStocks Shootingstar : Temporarily
TickleMyStocks 104476495 : Hi
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