4:10pm: Tech rout
Tech stocks caused Wall Street to plummet by Wednesday’s close following disappointing earnings from Alphabet and Tesla, igniting concerns over Big Tech's diminishing influence on market gains.
The S&P 500 dropped over 2% for the first time in over a year, the Dow Jones fell about 1.2%, and the Nasdaq Composite saw a significant 3.6% decline, marking its worst day since October 2022.
Tesla's shares decreased by more than 12%, and Alphabet's by over 5%, contributing to widespread tech sector losses, including Nvidia, Broadcom, and Arm.
Investors are now anticipating upcoming earnings reports from companies like Chipotle, Ford, and IBM, as well as key economic data releases later in the week.
12:16pm: Investors not impressed
US stocks were firmly in negative territory in the early afternoon on Wednesday as the first earnings reports from big tech firms failed to impress and sparked a broader selloff.
The Nasdaq plunged 2.9% or 523 points at 17,474 points, while the S&P 500 was down 1.8% at 5,457 points and the Dow Jones shed 0.9% at 40,015 points.
Tesla was down more than 10% at about $221 per share after it reported mixed results for Q2.
Alphabet’s reported its smallest earnings beat since 2023 which was not enough for investors, with the stock trading down 5% at about $175.
“Two of the Magnificent 7 stocks failed to create euphoria. The less-than-ideal set of earnings comes at a time when investors are questioning whether the AI rally has gotten ahead of itself,” Swissquote Bank senior analyst Ipek Ozkardeskaya commented.
9:45am: Stocks slump at the open
US stocks have taken a tumble at the open, with the Nasdaq tech stocks the main driver.
The Nasdaq Composite index is down 1.75%, with the S&P 500 falling 1.1% and the Dow Jones down 0.5%. The Russell 2000 small and mid-cap index is also down 0.5%.
Volatility is elevated, with the VIX index up 7.1%.
Tesla Inc (NASDAQ:TSLA) is one of the big fallers, down 9.6%, as it reported disappointing numbers after yesterday's close.
Alphabet Inc (NASDAQ:GOOG) is down 4.5% as while its headline numbers beat the Street, the overall tone did not seem to impress.
The top 15 stocks on the Nasdaq are all in the red, with Nvidia down 3.8% and back below $3 trillion valuation, while Apple and Microsoft are both down 1.6%.
7.10am: Tech retreat expected for Nasdaq
Nasdaq-listed tech stocks are expected to march at the head of a Wall Street retreat on Wednesday, led by Tesla after its underwhelming earnings report overnight.
Nasdaq 100 futures have dropped 1.05%, while S&P 500 futures are 0.7% lower, down 0.4% for the Dow Jones and 0.5% for the Russell 2000.
Google parent Alphabet Inc (NASDAQ:GOOG) and Tesla Inc (NASDAQ:TSLA) both reported earnings after the closing bell yesterday.
Alphabet's shares are down 3.5% premarket despite results beating expectations for both revenue and earnings per share.
Tesla has skidded 8.5% lower premarket as the electric vehicle maker’s second-quarter profits fell short of expectations and it pushed back Robotaxi expectations.
French luxury giant LVMH also reported overnight, with sales up 1% as Asia sales fell sharply.
"It is hard to see how the rally in markets can continue for now after several weaker than expected earnings reports," says market analyst Kathleen Brooks at XTB.
This has "led to concerns that stocks will fail to deliver the boost to earnings that would spur the next leg of the rally", says Brooks.
The S&P 500 is only 100 points down from its all-time high reached last week, but, she adds, "the slip in corporate earnings from the likes of Tesla and Google, which failed to set the market alight with its AI investments, suggests that the fundamental basis for a rally is slipping away as we reach the peak summer months."