Nasdaq futures slide as first Big Tech results disappoint
For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.
Futures down: Dow 0.44%, S&P 500 0.66%, Nasdaq 0.91%
July 24 (Reuters) -Futures tied to the Nasdaq fell sharply on Wednesday, as quarterly earnings from Tesla and Alphabet underscored investor concerns around the dominance of Big Tech stocks that have boosted Wall Street to all-time highs.
Tesla TSLA.O slumped 6.9% in premarket trading after reporting its lowest profit margin in over five years and missing second-quarter earnings expectations, as the EV maker cut prices to revive demand and increased spending on AI projects.
Google parent Alphabet GOOGL.O, too, shed 2.8% after flagging that capital expenses would remain high for the year, despite a second-quarter results beat.
"The first view on Big Tech earnings wasn't inspiring," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
"Two of the Magnificent 7 stocks failed to create euphoria when they reported their Q2 results. The less-than-ideal set of earnings comes at a time when investors are questioning whether the AI rally has gotten ahead of itself."
Most of the so-called Magnificent Seven, a bunch of megacap tech stocks, have notched double- to triple-digit percentage gains so far in 2024, riding on optimism around AI and an early start to Federal Reserve rate cuts.
As the elite group of stocks, barring Tesla, have steered the benchmark S&P 500 and the tech-heavy Nasdaq to record highs this year, market participants have turned wary around the valuation of these companies and have flocked to other underperforming sectors.
While investors are parsing the ongoing earnings season for clues on the health of corporate America in the face of decades-high interest rates, results from the tech giants will be key to determine if the Wall Street rally has more steam left.
Other megacaps including Apple AAPL.O, Microsoft MSFT.O, Amazon.com AMZN.O, Meta Platforms META.O and Nvidia NVDA.O were down between 0.5% and 2%.
Later in the day, investors will also parse economic data including the S&P Global's flash PMI, while Friday's personal consumption expenditures (PCE) price index will further set the tone around the U.S. monetary policy path.
Traders have priced in a near-92% chance of a 25 basis points interest rate cut by the Fed by its September meeting, as per CME's FedWatch Tool.
At 4:57 a.m. ET, Dow e-minis 1YMcv1 were down 177 points, or 0.44%, S&P 500 e-minis EScv1 were down 36.75 points, or 0.66%, and Nasdaq 100 e-minis NQcv1 were down 182.25 points, or 0.91%.
Further on the earnings front, solar inverter maker Enphase Energy ENPH.O jumped 6.9% after beating estimates for second-quarter operating profit.
While Texas Instruments TXN.O rose 2.5% after a second-quarter profit beat, Visa V.N dropped 3% after third-quarter revenue growth fell short of expectations in a rare miss for the world's largest payments processor.
Reporting by Ankika Biswas in Bengaluru; Editing by Varun H K
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
