Current:Home > StocksS&P and Nasdaq close at multiweek lows as Tesla, Alphabet weigh heavily -ClearPath Finance
S&P and Nasdaq close at multiweek lows as Tesla, Alphabet weigh heavily
View
Date:2025-04-17 05:35:01
The S&P 500 and Nasdaq closed at multiweek lows Wednesday, as lackluster earnings from Tesla and Alphabet undermined investor confidence in megacap tech names that had previously driven 2024's equity rally.
As the first of the Magnificent Seven stocks reported quarterly numbers, investors had been awaiting new data to see if lofty valuations were justified. With these seven companies having such sway over markets, their performance was bound to have wider repercussions.
Investor reactions pushed both the benchmark S&P 500 and the Nasdaq composite to their lowest finishes since June. Meanwhile, the Dow Jones Industrial Average closed below 40,000 points for the first time in two weeks.
Dave Grecsek, managing director in investment strategy and research at Aspiriant, noted the upward momentum of the first two weeks of July in equity markets had disappeared over the last week.
"There's a little bit of profit-taking, and then people are a little apprehensive about earnings announcements upcoming," he said.
Tesla weighed heavily Wednesday, slumping after the electric-vehicle maker reported its lowest profit margin in more than five years and missed second-quarter earnings estimates.
Google parent Alphabet dropped despite a second-quarter earnings beat, as investors focused on an advertising-growth slowdown and the company flagged high capital expenses for the year.
Tesla and Alphabet dragged the S&P 500 Communication Services and Consumer Discretionary sector indexes down, with Information Technology also among the weakest performers of the 11 S&P sectors.
Alphabet's losses underscored 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 in 2024, riding on optimism around AI adoption and expectations of an early start to the Federal Reserve's interest-rate cuts.
"When you put everything in an earnings context, you can really understand why those Mag 7 stocks have been performing so great because the earnings have been there," said Grecsek.
Any doubts, however, about the stocks meeting expectations will induce selling pressure. The other megacaps, Apple, Microsoft, Amazon.com, Meta Platforms, and Nvidia, all closed down.
Meanwhile, the blue-chip Dow, did not escape the negativity. Visa was among the stocks that weighed on it, dropping after its third-quarter revenue growth fell short of expectations.
According to preliminary data, the S&P 500, lost 128.10 points, or 2.31%, to end at 5,427.64 points, while the Nasdaq composite lost 654.94 points, or 3.64%, to 17,342.41. The Dow Jones Industrial Average fell 499.21 points, or 1.24%, to 39,858.88.
Chary of the high valuation of these companies, market participants started shifting to underperforming sectors in mid-July.
S&P 500 stocks, on average, are trading at a 21.4 price-to-earnings ratio, compared with the historical average of 15.9, LSEG data showed. Of the index companies that have reported second-quarter earnings to date, 78.9% have beaten results estimates.
A rotation into smaller-cap stocks has also been eyed, although they did not escape the ripples the megacaps caused: the Russell 2000 finished down.
In economic data, S&P Global's flash U.S. Composite PMI Output Index showed business activity climbed to a 27-month high in July.
Among others, AT&T gained after beating forecasts for wireless subscriber additions, while solar inverter maker Enphase Energy jumped after reporting a second-quarter operating profit beat.
Meanwhile, Roper Technologies dropped after it signaled third-quarter profit would fall below estimates. Boston Scientific traded down, despite lifting its 2024 profit target and beating second-quarter earnings estimates.
veryGood! (96273)
Related
- DeepSeek: Did a little known Chinese startup cause a 'Sputnik moment' for AI?
- Al Pacino Clarifies Relationship Status With Noor Alfallah
- Is Your Company Losing Money Due to Climate Change? Consider Moving to the Midwest, Survey Says
- Martha Stewart Shares Her Issue With Trad Wife Phenomenon
- Paris Hilton, Nicole Richie return for an 'Encore,' reminisce about 'The Simple Life'
- Taylor Swift in Arrowhead: Singer arrives at third home game to root for Travis Kelce
- 6-year-old dies after stepfather allegedly beat him with baseball bat
- Tarik Skubal turning in one of Detroit Tigers' most dominant postseasons ever
- Could your smelly farts help science?
- Supreme Court rejects IVF clinic’s appeal of Alabama frozen embryo ruling
Ranking
- Skins Game to make return to Thanksgiving week with a modern look
- 3 crew members killed in Kentucky medical helicopter crash were headed to pick up a patient
- I'm a Shopping Editor, Here's What I'm Buying From October Prime Day 2024: The 51 Best Amazon Deals
- Las Vegas will blow a kiss goodbye — literally — to the Tropicana with a flashy casino implosion
- 'As foretold in the prophecy': Elon Musk and internet react as Tesla stock hits $420 all
- Are colon cleanses necessary? Experts weigh in on potential risks.
- An unusual hurricane season goes from ultra quiet to record busy and spawns Helene and Milton
- Alaska Utilities Turn to Renewables as Costs Escalate for Fossil Fuel Electricity Generation
Recommendation
See you latte: Starbucks plans to cut 30% of its menu
Celebrate Taylor Swift's unprecedented Eras Tour with USA TODAY's enchanting book
Raven-Symoné's Body Was CGI'd Thinner on That's So Raven, New Book Claims
Should you give your dog gluten-free food? How to tell if pup has an intolerance.
Grammy nominee Teddy Swims on love, growth and embracing change
Man falls to his death in Utah while canyoneering in Zion National Park
6-year-old dies after stepfather allegedly beat him with baseball bat
The cumulative stress of policing has public safety consequences for law enforcement officers, too