In a notable downturn, US equity indexes faced significant challenges, highlighted by a steep drop in the Nasdaq Composite, which fell by over 500 points as investors reacted to disappointing quarterly reports from industry giants Tesla and Alphabet. This decline raised concerns about investor confidence and risk sentiment in the overall market landscape. The Nasdaq experienced a decline of 2.8%, settling at 17,486.1, while the S&P 500 dropped by 1.7% to 5,463.2, and the Dow Jones Industrial Average slipped 0.7% to close at 40,074.3.
Key sectors such as communication services, consumer discretionary, and technology were among the hardest hit throughout the trading day, following poor earnings reports from the renowned Magnificent-Seven companies. Tesla emerged as one of the most significantly affected stocks, witnessing a staggering 10% drop during the trading session.
The electric vehicle manufacturer's Q2 earnings report fell short of market expectations, primarily due to reduced vehicle prices and associated restructuring costs that have raised eyebrows among investors. On the other hand, Alphabet, the parent company of Google, reported Q2 results that exceeded overall expectations; however, it was marred by underwhelming YouTube advertising revenue, which fell short of analysts' forecasts.
As a result, Alphabet's shares fell by 5.1% intraday, further contributing to market pessimism. In economic indicators, the July flash reading for manufacturing conditions from S&P Global showed a decline to a seven-month low of 49.5, down from 51.6 in June. This reading contrasted sharply with expectations of no change, according to a survey compiled by Bloomberg.
This decline aligns with similar trends observed in both the Empire State and Richmond Fed manufacturing indexes, indicating contraction in the sector, while the Philadelphia Fed index suggested some expansion. Additionally, new home sales in the United States dropped to an annual rate of 617,000 in June, down from an upward revision of 621,000 in May, falling below the anticipated 640,000 rate.
Year-over-year comparisons indicated a downturn of 7.4% in home sales, raising questions about the housing market's stability moving forward. In the bond market, treasury yields displayed mixed results. The yield on the 10-year treasury note decreased by one basis point, settling at 4.23%, while the yield on the 30-year note experienced a modest increase of 1.5 basis points, rising to 4.48%.
This variability in yields reflects ongoing market reactions to both corporate and economic news. Commodities also saw fluctuations, with West Texas Intermediate crude oil prices rising by 1.1%, reaching $77.79 per barrel, as global supply concerns continue to affect pricing dynamics. As investors reassess their portfolios amid these economic metrics and corporate earnings reports, the stock market remains vigilant, navigating through uncertainties that may affect both short-term performance and long-term growth prospects..