4:15pm: Nasdaq closes deep in the red
US stocks ended sharply lower on Thursday, with the Nasdaq leading the losses as investors dumped technology shares after earnings from Tesla and Alphabet failed to ease concerns about rising spending.
The Nasdaq fell 2.2% to 25,138, while the S&P 500 dropped 1.2% to 7,408. The Dow Jones Industrial Average shed 507 points, or 1%, to close at 51,712.
Despite reporting strong revenue growth, Tesla and Alphabet came under heavy selling pressure after both companies warned that capital expenditures are set to climb, raising fresh questions about profitability and free cash flow. The disappointing market reaction weighed on the broader technology and communications sectors, dragging the Nasdaq to its steepest decline in weeks.
Adding to the pressure, oil prices surged toward the $100-a-barrel mark as escalating conflict in the Middle East fueled fears of supply disruptions. The jump in crude prices reignited inflation concerns, pushing Treasury yields to their highest levels of the year and further denting appetite for growth stocks.
Investors are increasingly worried that higher energy prices could complicate the Federal Reserve's path on interest rates, particularly if inflation proves more persistent than expected.
Attention now turns to Intel, which is set to report quarterly earnings after the closing bell, with investors looking for further clues on the health of the semiconductor industry after a bruising session for the broader tech sector.
3:40pm: Proactive news headlines
- Custom Health Holdings Inc (TSX:CHLT) initiated Buy-rated coverage from Stifel with a C$12 price target, with analysts highlighting significant upside driven by the company's medication management platform.
- 374Water Inc (NASDAQ:SCWO, FRA:8LL) said a US Army Corps of Engineers report independently validated its AirSCWO technology, demonstrating 99.9993% destruction and removal efficiency for PFAS during testing.
- Royalty Management Holding Corp (NASDAQ:RMCO) said its royalty partner ReElement Technologies secured new financing to expand operations, a move expected to increase royalty revenue under their existing agreement.
- Replenish Nutrients Holding Corp (CSE:ERTH, OTC:VVIVF, FRA:7KE) closed the $7.5 million equity portion of a previously announced $15 million strategic investment from SRC Agrominerals Sales, with the convertible debenture portion expected to close in August 2026.
2:30pm: Market movers
- Tesla Inc (NASDAQ:TSLA) shares fell despite record vehicle sales and stronger-than-expected revenue as investors focused on weaker profitability and future growth concerns.
- Alphabet Inc (NASDAQ:GOOG) shares dropped despite beating earnings and revenue forecasts as investors weighed concerns around valuation and expectations following the results.
- American Airlines Group Inc (NASDAQ:AAL, XETRA:A1G) shares fell despite beating second-quarter earnings expectations as the carrier warned that higher fuel costs could pressure third-quarter results.
- T-Mobile US Inc (NASDAQ:TMUS, XETRA:TM5) reported stronger-than-expected second-quarter earnings but saw shares decline after revenue narrowly missed Wall Street estimates.
- 374Water Inc (NASDAQ:SCWO, FRA:8LL) said a US Army Corps of Engineers report independently validated its AirSCWO technology, showing 99.9993% destruction and removal efficiency for PFAS during a demonstration.
- RTX Corp (NYSE:RTX, XETRA:5UR) shares climbed after the aerospace and defense company delivered better-than-expected second-quarter results and raised its full-year 2026 outlook.
- Southwest Airlines Co (NYSE:LUV) shares declined after stronger-than-expected second-quarter earnings were offset by a weaker-than-expected third-quarter outlook.
- International Business Machines Corp (NYSE:IBM) shares slipped after second-quarter revenue and earnings missed expectations and the company lowered its full-year revenue growth forecast.
- Replenish Nutrients Holding Corp (CSE:ERTH, OTC:VVIVF, FRA:7KE) closed a $7.5 million equity investment from SRC.
12:50pm: Oil prices surge after Houthi attacks
Oil prices surged above US$100 a barrel on Thursday after Houthi rebels claimed attacks on two Saudi oil tankers in the Red Sea, raising fresh concerns over global energy supplies and rattling financial markets.
“Two of the world’s busiest shipping corridors are under threat in the same month, and markets are only just beginning to work out what that means," said Nigel Green, CEO of deVere Group.
"The timing is awkward for the Federal Reserve, which meets on July 29. Inflation had climbed for three straight months to 4.2% in May, its highest level in years, before cooling to 3.5% in June largely because gasoline prices fell nearly 10% during the brief ceasefire between the US and Iran.
"With that ceasefire now collapsed and oil back above $100, the drop which gave the Fed room to relax may already be reversing."
11:45am: Alphabet's spending rattles investors
Alphabet Inc (NASDAQ:GOOG) shares fell more than 6% after investors looked past better-than-expected second-quarter earnings and focused on the company’s soaring AI spending.
The Google parent reported revenue of $119.8 billion and earnings per share of $9.11, beating Wall Street forecasts, while Google Cloud revenue jumped 82% year over year.
However, quarterly capital expenditure doubled to $44.9 billion, keeping Alphabet on pace for up to $190 billion in spending this year, while free cash flow dropped sharply. Investor sentiment was also weighed down by reports that Google delayed its Gemini 3.5 Pro AI model, although the company has disputed those claims.
11:00am: Tesla sinks on spending, profit
Tesla Inc (NASDAQ:TSLA) shares were down about 14% after the electric vehicle maker reported second-quarter results that topped revenue expectations but missed on profit.
Revenue rose 26% year over year to $28.24 billion, while deliveries reached a record 480,126 vehicles, marking the first annual growth in two years. Services revenue climbed 50% and Full Self-Driving subscriptions increased 56%, with the company also reporting its largest order backlog since 2023.
However, adjusted earnings of $0.33 per share missed forecasts, while gross and operating margins weakened as lower vehicle prices, declining regulatory credit sales and rising costs weighed on profitability.
Heavy capital spending also pushed free cash flow into a deficit.
10am: Nasdaq leads losses as Tesla and Alphabet slide
US stocks have extended yesterday's losses in early deals, with Tesla dropping over 10% to lead the Nasdaq down 1.8%.
The S&P 500 and Dow Jones are both off more than 0.9%.
Alphabet fell 6.6%, with other Mag 7 names dropping too, including Amazon and Meta both slipping more than 3%.
Biggest faller on the S&P is pest controller Rollins, down 12% after reporting weaker second-quarter revenue growth than expected.
Semis are also being sold again, with Microchip Technology, Qualcomm and Texas Instruments among the Nasdaq's biggest fallers.
Top of the S&P leaderboard is United Rentals after saying it will increase its spending on its fleet this year and raising full-year guidance.
9.20am: Record low US jobless claims
US initial jobless claims have fallen to their lowest level since 1969.
New unemployment claims fall to 187K, down from 209K, while the market forecast was for a small rise to 210K.
"While seasonal factors may be impacting the headline number at the margins, the extremely low level of claims highlights a low layoff rate and the strength underlying the labor market," says Matthew Martin at Oxford Economics.
"In the wake of moderating jobless claims, continued claims fell a touch further in the week ended July 11, with the four-week moving average creeping lower.
"The decent pace of nonfarm payroll gains amid weak labor-supply conditions should translate into lower continued claims in the weeks ahead."
8.30am: Iran war has entered a more dangerous phase, RBC warns
The Iran conflict has entered a "decidedly more dangerous phase", with Red Sea oil flows and critical infrastructure increasingly at risk, according to RBC Capital Markets.
Brent crude has topped $99.30 in recent minutes, but commodity strategist Helima Croft says these prices are a "lagging indicator of the extreme pressure building in the region".
Croft warns that the reported targeting of two Saudi tankers by Yemen's Houthis could cause a "material reduction" in Red Sea oil shipments and undermine the belief that "the market always finds a workaround".
Prices could surpass the 2022 peak of $128 a barrel or even reach the 2008 high of $146 in a full regional war, Croft warns.
She says alternative routes for tankers would significantly increase costs and extend journeys to Asia by around four weeks to roughly 54 days.
Iran's attacks on Kuwaiti desalination facilities are described as "especially concerning", with Kuwait relying on desalination for 90% of its drinking water.
Some Gulf cities could reportedly have only seven days of clean water if plants were disabled.
7.45am: Nasdaq and Dow set to extend losses
Wall Street is set for a moderately lower open on Thursday after mixed results from Alphabet and Tesla, while a fresh surge in oil prices revived concerns about inflation and interest rates.
Futures for the Dow Jones, S&P 500 and Nasdaq were all down around 0.3%.
This would see losses extended from the day before, when the Nasdaq dropped 0.6% to 25,691, the S&P fell 0.1% to 7,499, and the Dow finished essentially flat, down six points at 52,219.
After the closing bell, Alphabet Inc (NASDAQ:GOOG) beat revenue and earnings forecasts, with cloud revenue surging 82%, but its shares fell in after-hours trading after the Google owner raised its planned capital expenditure to as much as $205 billion this year. Shares were down 4.1% in pre-market trading.
Tesla Inc (NASDAQ:TSLA) shares declined 6.2% after reporting its first quarter of negative free cash flow in more than two years as operating costs surged.
European markets were also lower, led by a 1.7% decline in Milan as semiconductor manufacturer STMicroelectronics (NYSE:STM) fell sharply after weaker second-quarter earnings and soft third-quarter guidance disappointed investors following a three-month rally.
In commodities, WTI crude has jumped 4.1% on Thursday morning to above $90.65 a barrel, its highest level in six weeks, as US Central Command confirmed another round of strikes against Iran.
"Strikes between the US and Iran show no sign of easing, and the Houthis said they targeted two oil tankers in the Red Sea yesterday, raising fears that the conflict is widening," said Henry Allen at Deutsche Bank.
This has raised fresh supply fears as Saudi Arabia has redirected oil exports to the Red Sea port of Yanbu, prompting "fresh concerns about a more prolonged stagflationary shock", with investors pricing in higher inflation and a more hawkish path for central banks.
Fed futures now indicate a 36% chance of an interest-rate increase next week. The European Central Bank is expected to leave rates unchanged when it announces its latest decision later today.
Before the bell, earnings are due from defence groups RTX and Lockheed Martin, telecoms names T-Mobile and Nokia, and other heavyweights including Thermo Fisher, TotalEnergies, Blackstone, Freeport-McMoRan, Comcast and Honeywell.
After the close, attention turns to Intel and SAP, along with gold miner Newmont.