In recent trading sessions, US benchmark equity indexes experienced decline, with significant pressure on the Nasdaq Composite and the S&P 500 primarily due to a post-earnings sell-off in high-profile stocks including Tesla and Alphabet. The Nasdaq, known for its technology-focused stocks, fell by 2.7%, landing at a value of 17,506.7, while the S&P 500 decreased by 1.6% to 5,465.1.
Meanwhile, the Dow Jones Industrial Average saw a drop of 0.7%, closing at 40,063.7. Breaking down sector performances, the technology sector suffered the most, with a downturn of 3.2%. In stark contrast, utilities emerged as the sector with gains, indicating a flight to safety by investors amid volatility. The sharp decline in Tesla’s stock, which plummeted by 10%, marked its steepest drop on the Nasdaq and the second-worst on the S&P 500.
This downturn followed the company’s announcement of second-quarter earnings that failed to meet market expectations, largely due to reduced vehicle prices and restructuring charges, which raised investor concerns over future profitability. On the other hand, Alphabet’s Class A and C shares fell by over 4.5% each intraday, amidst a mixed reception to their second-quarter results.
Despite outperforming expectations, management expressed caution regarding slowing advertisement trends and challenging comparisons in the latter half of the fiscal year, prompting analysts at D.A. Davidson to issue warnings to clients about potential headwinds. The recent earnings reports from major technology companies have intensified worries about the sustainability of Big Tech's dominance, which has been instrumental in driving Wall Street to record highs. Lamb Weston, another significant player, recorded a staggering drop of nearly 28% on the S&P 500, marking it as the worst performer.
The frozen fries manufacturer indicated an anticipated annual drop in earnings for fiscal 2025, following a revenue decline and earnings that were below analyst forecasts due to ongoing challenging market dynamics. Conversely, CoStar Group shares surged by 6.2%, positioning it as the top gainer on the Nasdaq and the second-best on the S&P 500.
The company revised its full-year earnings outlook upwards after posting a solid second-quarter performance. AT&T experienced a year-over-year decline in second-quarter earnings yet managed to exceed expectations in subscriber additions, influencing its stock to rise by 4.9%, thus joining the ranks of the S&P 500's top gainers. As the earnings season continues, other companies such as International Business Machines, ServiceNow, Chipotle Mexican Grill, and Ford Motor Company are slated to announce their results after the closing bell on Wednesday, which could further influence market sentiments. In broader economic indicators, the US 10-year yield edged up by 1.9 basis points, aligning at 4.26%, while the two-year yield remained stable at 4.41%. Economic performance reflected mixed signals, with new-home sales unexpectedly declining and median prices showcasing sequential growth, as revealed in recent US government data. Private-sector output growth showed a notable increase in July, reaching its highest point since April 2022, driven predominantly by the service sector's expansion, though the one-year outlook declined to a three-month low based on S&P Global’s flash purchasing managers' index. Additionally, mortgage applications experienced a downturn despite a drop in interest rates, attributed to continuing affordability challenges amid elevated home prices, according to data from the Mortgage Bankers Association. Moreover, commodity movements reflected an upward shift, with West Texas Intermediate crude oil rising by 1% to $77.72 per barrel, while gold prices increased by 0.3%, reaching $2,413.50 per troy ounce.
In contrast, silver prices experienced a slight decrease, falling by 0.3% to $29.26 per barrel..