allowing Tesla to decline investors
The balance sheet season is gaining momentum - and Alphabet and Tesla are causing the first major weights on the stock market for analysts to be disappointed. For the electric vehicle maker, it's more than 12% down. Payment processors like Visa are also coming under pressure.
US technology stocks took a hit again on Wednesday due to disappointing corporate balance sheets. The Nasdaq Composite index of technology stocks dropped 3.6% to 17,342 points, its lowest level since June. The Dow Jones Industrial Average of blue-chip stocks lost 1.2% to 39,853 points, and the broad S&P 500 index fell 2.3% to 5,427 points.
Disappointing quarterly results from Alphabet, the parent company of Google, raised doubts among investors about the continuation of the tech rally. The shares fell more than 5% due to weak growth in the advertising business. "Investors were quick to find faults and focused on slow growth in the ad business," said Dan Coatsworth, an analyst at AJ Bell.
The Philadelphia Semiconductor index fell more than 5%. "When money flows out of the technology sector, it will be quite dramatic," said David Morrison, a market analyst at TradeNation. The big tech stocks had driven the indices to all-time highs in the first half of 2024, particularly due to the hype surrounding the artificial intelligence theme. As market participants began to shift funds to sectors with weaker price performance in mid-July, Tesla lost more than 12%.
Visa pulls down payment processors
US investors sold off shares of payment processors after Visa failed to meet expectations for the quarter. Visa shares lost about 4%. Mastercard fell roughly 2%, PayPal 2.7%, and Block 7.7%. Visa reported revenue of $8.9 billion, which fell short of analyst estimates. "Visa described the overall consumer spending trend as stable, but acknowledged a certain weakness in consumers in the lower price segment and macroeconomic pressure in China," wrote JP Morgan analysts.
Strong sales growth in the US boosted the shares of the California solar panel maker Enphase Energy by nearly 13%. "Enphase inventory levels have normalized," according to Evercore ISI analysts. AT&T saw surprisingly strong growth in mobile phone customers. The shares rose 5.2%.
Declining US crude oil inventories put an end to a prolonged slide in the oil market. Brent and WTI crude oil each rose 0.7% to $81.50 and $77.49 a barrel, respectively. According to official government data, US crude oil inventories fell by 3.7 million barrels in the week ending July 19 to 436.5 million barrels. Analysts had expected a decline of 1.6 million barrels. "Higher crude oil exports, lower refinery utilization (impact of Hurricane), and a recovery in implied demand were the reasons for these large declines," said UBS analyst Giovanni Staunovo. This is the first time since September 2023 that US crude oil inventories have fallen for four weeks in a row.
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The stock prices of tech giants like Tesla Motors also saw a significant drop, with a loss of over 12%, due to disappointing quarterly results and shifting investor sentiment. The Dow Jones Industrial Average, which includes some of the largest and most established companies, was also impacted, with a decrease of 1.2%. Wall Street analysts and investors are closely watching the stock trading patterns of these companies, as they often serve as indicators of the broader economy. Recently, the Dow Jones Industrial Average reached an all-time high due to strong performances by tech stocks, but this trend seems to be reversing. The Dow Jones' Dow Jones Industrial Average index, which is a widely followed benchmark, is now down by 1.2%. This is a significant shift, as the tech sector had been driving the market in recent months. The performance of Tesla Motors, in particular, is an interesting case study, as the electric vehicle manufacturer has seen significant growth in recent years, but is now facing challenges in the stock market.
