On Wednesday, US equity indexes ended the day on a low note, driven by disappointing quarterly earnings from major companies such as Tesla and Alphabet. This turn of events has sparked concerns about the ongoing potential of the iconic Magnificent Seven stocks to uphold market performance. Tesla, the renowned electric vehicle manufacturer, experienced a notable decline with shares plunging over 12%.
This downturn followed the company's announcement of second-quarter earnings, which did not meet market expectations. Factors contributing to this underperformance included a reduction in vehicle prices along with significant restructuring costs. In a parallel development, Alphabet, which owns popular search engine Google, saw its class A and C shares dip nearly 5% each.
The management of Alphabet flagged warnings regarding a slowdown in advertising revenue and pointed to more challenging year-over-year comparisons expected in the latter half of the year. Adding to the broader economic landscape, recent US government data revealed a surprising decline in new-home sales for the prior month.
The median prices at a national level, however, demonstrated a return to sequential growth. Specifically, new-home sales dropped to an annualized rate of 617,000 in June, a decrease from an upwardly revised 621,000 in May. This figure also fell short of the anticipated 640,000 rate and marked a 7.4% decline compared to June 2023 numbers. On the commodities front, crude oil prices reflected an upward trend.
September West Texas Intermediate crude oil prices rose by $0.70, reaching $77.66 per barrel. Concurrently, the global benchmark, September Brent crude, also saw an increase, last priced at $81.66 after a $0.65 rise. This surge occurred against a backdrop of diminishing total crude oil inventories, which fell by 3.1 million barrels during the week ending July 19.
Specifically, commercial oil inventories decreased by 3.7 million barrels, while the US Strategic Petroleum Reserve recorded an increase of 700,000 barrels. Conversely, AT&T enjoyed a positive day in the market as its shares climbed by 5.3%. The telecommunications giant exceeded expectations by adding a larger-than-anticipated number of postpaid phone subscribers during the second quarter and continued to uphold its earnings projection for the full year. In stark contrast, Lamb Weston faced a significant downturn with shares retreating 28%.
This dramatic drop came after the company provided guidance indicating an expected annual decrease in earnings for fiscal 2025. The decline followed the reporting of unexpected revenue reductions and earnings that fell below forecasts for the fourth quarter, all amidst ongoing market challenges..