US Markets
Wednesday, July 24th, 2024 5:53 pm EDT
Key Points
- The Nasdaq Composite dropped 2.7% due to disappointing reports from Alphabet and Tesla, leading to its worst day since December 2022, with Alphabet shares falling 5% and Tesla shares declining 10%.
- Despite the overall market downturn, the earnings season showed strength as over 25% of S&P 500 companies reported their second-quarter earnings with roughly 80% surpassing expectations, although weaker-than-expected U.S. manufacturing data and new home sales added to investor concerns.
- The shift to small-cap stocks held strong, with the Russell 2000 index up 9% for the month despite a 0.6% drop during the trading session, contrasting with the declines in major tech stocks like Nvidia, Meta Platforms, and Microsoft.
On Wednesday, stocks plummeted as disappointing reports from two major tech companies dampened investor sentiment, pushing the Nasdaq Composite towards its worst day since December 2022. The tech-heavy Nasdaq dropped 2.7%, the S&P 500 slid 1.6%, and the Dow Jones Industrial Average shed 304 points, or 0.8%.
Alphabet, Google’s parent company, saw its shares fall 5% despite reporting a top and bottom line beat, as YouTube advertising revenue fell short of estimates. Meanwhile, Tesla’s shares declined 10% due to weaker-than-expected results and a 7% year-over-year drop in auto revenue. This decline impacted other major tech stocks, with Nvidia and Meta Platforms each losing 4%, and Microsoft sliding 3%.
These reports provided the first insight into how megacap companies fared during the second quarter. Wall Street closely monitors these companies as they are responsible for much of this year’s gains. Strategas strategist Ryan Grabinski highlighted that earnings misses from these key players could prompt a market rotation, expressing that initial “AI Enthusiasm” might turn to “AI Disappointment.”
Despite the downturn for these tech giants, the earnings season overall started strong, with over 25% of S&P 500 companies reporting their second-quarter earnings, and roughly 80% surpassing expectations, according to FactSet data. However, the shift to small-cap stocks appeared resilient, with the Russell 2000 small-cap index only down 0.6% for the day but up 9% for the month, compared to the Dow’s 2% monthly gain, the S&P 500’s unchanged performance, and the Nasdaq’s over 1% decline.
Adding to investor concerns was weaker-than-expected U.S. manufacturing data. The U.S. PMI flash manufacturing output index fell to 49.5 in July, slipping into contraction territory due to declines in new orders, production, and inventories, against an expected reading of 51.5. Additionally, new home sales for June also fell short of economists’ expectations.
In the broader market, other notable movements included a 27% plunge for Lamb Weston, which reported disappointing fiscal fourth-quarter results and forecast a challenging new fiscal year. Conversely, Enphase Energy surged around 11% on stronger-than-expected third-quarter guidance.
Despite the tech sector’s struggles, some stocks in the S&P 500 hit new 52-week highs, including NVR, Inc., Arthur J. Gallagher, Fiserv, Lockheed Martin, Pentair, Packaging Corp. of America, Welltower, and Atmos Energy. Meanwhile, six stocks, including Lululemon and UPS, reached 52-week lows.
Overall, the day highlighted the volatility and mixed performance within different market sectors, reflecting broader economic uncertainties and shifting investor expectations.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/07/23/stock-market-today-live-updates.html
