Nasdaq futures set to slide at open after Tesla, Alphabet disappoint
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Visa falls after missing revenue growth forecasts
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Rivian falls; will face trial in Tesla trade secrets theft case
Futures down: Dow 0.45%, S&P 500 0.90%, Nasdaq 1.39%
Updated at 8:27 a.m. ET/ 1227 GMT
By Ankika Biswas and Lisa Pauline Mattackal
July 24 (Reuters) - The tech-heavy Nasdaq was set to take the biggest hit in an expected weak opening for Wall Street onWednesday after lackluster quarterly resultsfrom Tesla and Alphabet raised questions about the dominance of Big Tech and the AI boom.
Tesla TSLA.O slumped 8.5% inpremarket trading and looked set to lose over $65 billion in market value, if losses hold, after the EV maker reportedits lowest profit margin in more than fiveyears and missed second-quarter earnings estimates.
Google parent Alphabet GOOGL.O, too, shed 4.3% despite posting a second-quarter earnings beat, as investors focused on a slowdown in advertising growth and the company flagged highcapital expenses for the year.
Alphabet's losses underscore the high earnings bar for the so-called Magnificent Seven, a set of megacap tech stocks that have notched double- and triple-digit percentage gains so far in 2024, riding on the optimism around AI adoption and expectations of an early start to the Federal Reserve's rate cuts.
"I can't help thinking (that) if the tech sector does sneeze, the whole market could catch it," said David Morrison, senior market analyst at TradeNation.
Results from the tech giants, which have driven the main indexes to all-time highs in the first half of 2024, will be key in determining if Wall Street's rally has momentum to spare.
Wary of the high valuation of these companies, market participants started shifting tounderperforming sectors in mid-July.
"If money comes out of the tech sector, it'll come out quite dramatically. I don't think the first reaction of those investors is going to be to immediately redeploy those funds into mid- and small-cap stocks... they'll want to take a step back," Morrison said.
Other megacaps such as MicrosoftMSFT.O, Amazon.com AMZN.O, Meta Platforms META.O and Nvidia NVDA.O were down between 0.6% and2.4% on the day.
Futures tracking the Russell 2000 RTYcv1 fell1% after the small-cap index jumped in Tuesday's weak session.
Investors will examine theS&P Global's flash PMI shortly after markets open. However, the personalconsumption expenditures data, due on Friday, is this week's most awaited economic release because it can help corroborate if investor bets on the monetary policy path are pointing in the right direction.
Traders have priced in a 95% chance the Fed will cut rates by 25basis points by September and expect two rate cuts this year, according to CME and LSEG's FedWatch data.
At 8:27 a.m. ET, Dow e-minis 1YMcv1 were down 181 points, or 0.45%, S&P 500 e-minis EScv1 were down 50.25 points, or 0.90%, and Nasdaq 100 e-minis NQcv1 were down 276.5 points, or 1.39%.
In otherearnings, AT&T T.N gained3.4% after it beat forecasts forwireless subscriber additions.
Solar inverter maker Enphase Energy ENPH.O jumped 2.5% after beating estimates for second-quarter operating profit, while Texas Instruments TXN.O rose 1.8% after a second-quarter profit beat.
VisaV.N dropped 3.9% after its third-quarter revenue growth fell short of expectations, a rare miss for the world's largest payments processor, while Thermo Fisher Scientific TMO.N fell1.7% after results.
Rivian Automotive RIVN.O lost4.2% as theEV maker will go on trial over allegations it encouraged its employees who defected from Tesla to steal trade secrets.
Tesla's automotive gross margins https://tmsnrt.rs/4c2swJk
Reporting by Ankika Biswas and Lisa Mattackal in Bengaluru; Editing by Varun H K and Pooja Desai
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