2024-07-25 05:07:20
American stock indices fell sharply following the trading results on Wednesday, the Nasdaq Composite fell by 3.6%, showing the worst dynamics since October 2022, Day.Az reports with reference to Interfax.
The S&P 500’s 2.3% drop was the sharpest since December 2022, Market Watch notes.
The market collapse was triggered by quarterly results from Tesla Inc. and Alphabet Inc., which fell short of the “high bar” set by Wall Street analysts, writes Market Watch.
These are the first two companies from the so-called “magnificent seven” of American IT giants that have published reports for the past quarter.
Tesla shares fell 12.3% by the end of trading – the most since September 2020, according to Dow Jones. The American electric car maker increased revenue in the second quarter by 2%, to a record $25.5 billion, but its net profit fell by 45%, and profit excluding one-time factors ($0.52 per share) was significantly worse than the consensus forecast of experts surveyed by FactSet ($0.61 per share).
Alphabet Inc. shares fell 5%. The company’s net profit and revenue beat market forecasts in the last quarter, but advertising revenue growth fell short of expectations. Traders also took Alphabet’s increased capital expenditures negatively, Barron’s notes.
Share prices of other “magnificent seven” companies also fell sharply, including Nvidia Corp. by 6.8%, Meta Platforms Inc. (recognized as an extremist organization in Russia and banned) by 5.6%, Microsoft Corp. by 3.6%, Amazon.com Inc. by 3%, and Apple Inc. by 2.9%.
US technology stocks began to fall sharply after the publication of statistics on July 11 showing a significant slowdown in US inflation. The decline in inflationary pressures increased traders’ confidence that the Federal Reserve will soon begin easing monetary policy. Experts believe that the first rate cut by the US Central Bank will occur in September.
In these conditions, traders began selling shares of IT giants that have risen significantly in price in recent months, fixing profits and freeing up funds to buy shares of companies that, in their opinion, will benefit the most from the easing of the Fed’s policy. Companies of the “magnificent seven” have lost more than $1.7 trillion in capitalization since the publication of June inflation data, Market Watch notes.
Subscribe to our WhatsApp channel and stay up to date with the latest news!