Nasdaq tumbles 3% in worst day of the year amid tech-earnings rout
- US stocks tumbled on Wednesday, with the Nasdaq suffering its worst decline of 2024.
- Tesla missed earnings estimates for the second quarter, and Alphabet's YouTube ad revenue missed.
The technology sector led US stocks lower Wednesday, with the Nasdaq plunging 3% as it headed for its worst trading day of the year.
Investors fled the tech sector amid disappointing earnings on Tuesday, with Tesla missing estimates and Alphabet reporting that YouTube ad revenue fell short of expectations last quarter. Tesla shares were down more than 10% at 12:50 p.m. ET, trading at $220.85, while Alphabet shares fell 5% to $174.40.
"This is the fourth successive quarter of earnings misses, a first for Elon Musk's visionary EV maker," David Morrison, a senior market analyst at Trade Nation, said of Tesla in a note. "The question is how this will affect sentiment going forward? Will today's sell-off prove to be an isolated, knee-jerk reaction which quickly dissipates? Or could it poison the well as the Q2 earnings season picks up?"
Investors are eyeing a slew of coming high-profile earnings reports, with Meta, Apple, and Amazon on deck to present their financials next week.
On the economic front, Thursday will see the reveal of second-quarter GDP figures, and the Federal Reserve's favorite inflation measure is set to be published on Friday. The personal consumption expenditures index is expected to show inflation continued to cool last month, with prices rising by 2.5%. GDP, meanwhile, is expected to clock in at 2.1%, higher than the revised first-quarter reading of 1.4%.
Here's where US indexes stood shortly after midday on Wednesday:
- S&P 500: 5,456.69, down 1.78%.
- Dow Jones Industrial Average: 40,015.58, down 0.85% (-342.51 points).
- Nasdaq composite: 17,469.09, down 2.95%.
Here's what else is going on today:
- There are four bullish signals pointing to more gains ahead for the stock market, Bank of America said.
- There's a big rotation from cash to stocks — and it could help push the S&P 500 up 17% by the end of the year, according to UBS.
- The stock market is approaching two catalysts that could help spark the next leg of the bull run.
- The Fed is going to cut rates only once in 2024 as shelter inflation is too high and the job market remains too hot, Vanguard said.
In commodities, bonds, and crypto:
Oil futures were up. West Texas Intermediate crude oil rose 0.9% to $77.65 a barrel. Brent crude, the international benchmark, was up 0.7% to $81.57 a barrel.