Investors staged a broader market sell-off on Wednesday as underwhelming earnings reports from Alphabet and Tesla pulled the S&P 500 Index and Nasdaq Composite down to their worst performances since 2022. The broader market index fell over 2%, while the tech-heavy Nasdaq dropped over 3.6%. Meanwhile, the Dow Jones Industrial Average lost over 500 points as investors questioned the true valuations across the market.
Here's how the market settled on Wednesday:
S&P 500 Index (NYSE: SPY): -2.31% or -128.61 points to 5,427.13
Dow Jones Industrial Average (NYSE: DIA): -1.25% or -504.22 points to 39,853.87
Nasdaq Composite Index (NASDAQ: QQQ): -3.64% or -654.94 points to 17,342.41
On the Earnings Front:
Tesla (NASDAQ: TSLA) reported weaker-than-expected second-quarter earnings after market on Tuesday as the electric vehicle maker's auto sales fell for a the second straight quarter. Still, the company posted $25.5 billion in quarterly revenue, which came in ahead of the analyst expectations.
Notably, CEO Elon Musk said during the company's earnings call that Tesla will host its highly anticipated robotaxi event on Oct. 10 (it was originally meant to take place on Aug. 8), adding that he would be "shocked" if the company cannot launch its first robotaxi ride "next year."
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) posted second-quarter revenue and earnings that were in-line with analyst expectations, but its key advertising revenue for YouTube disappointed. Notably, the Google-parent's revenue rose 14% year-over-year, driven by its Cloud revenue that surpassed $10 billion in revenue and $1 billion in operating profit for the first time.
"Our strong performance this quarter highlights ongoing strength in Search and momentum in Cloud," CEO Sundar Pichai said in the company's earnings release. "We are innovating at every layer of the AI stack. Our longstanding infrastructure leadership and in-house research teams position us well as technology evolves and as we pursue the many opportunities ahead."
AT&T (NYSE: T) reported strong second-quarter earnings on Wednesday as the telecom's wireless subscriber additions topped estimates. The company added 419,000 monthly bill-paying wireless phone subscribers during the quarter, compared with estimates of 284,800 additions according to FactSet.
Lamb Weston (NYSE: LW) shares dropped over 28% in the french fry producer's worst single day performance since its IPO in 2016 as the company posted disappointing fiscal fourth-quarter earnings and issued weak forward guidance.
"The operating environment has changed rapidly over the past twelve months as global restaurant traffic and frozen potato demand softened due to menu price inflation continuing to negatively affect global restaurant traffic," CEO Tom Werner said in a release.
In Economic News:
New U.S. Home Sales continued recent housing market trends, reaching a 7-month low as high mortgage rates squeezed some would-be buyers out of the market in June. Sales of new single-family homes came in at a seasonally adjusted annual pace of 617,000 in June, according to the Census Bureau's report released Wednesday, representing a 0.6% decline from May and a 7.4% drop year-over-year.
U.S. Manufacturing unexpectedly contracted in July as new orders, production and inventories weighed on the sector, according to the S&P Global flash reading of purchasing managers on Wednesday. The U.S. PMI flash manufacturing output index fell to 49.5, down to a six month low from June's slightly expansionary reading of 52.1.
U.S. Services, meanwhile, rose to a 28-month high in July, according to the S&P Global's flash reading. The U.S. PMI flash services business activity rose to an expansionary reading of 56.0 from June's print of 55.3.
"The flash PMI data signal a 'Goldilocks' scenario at the start of the third quarter, with the economy growing at a robust pace while inflation moderates," said Chris Williamson, chief business economist at S&P Global Market Intelligence, in a statement. "However, both manufacturers and service providers are reporting heightened uncertainty around the election, which is dampening investment and hiring."
For Thursday:
Market participants will react to another series of quarterly earnings reports from companies including IBM (NYSE: IBM), Chipotle Mexican Grill (NYSE: CMG), Ford (NYSE: F), Honeywell International (NYSE: HON), Astrazeneca (NASDAQ: AZN), Unilever (NYSE: UL), Royal Caribbean Cruise (NYSE: RCL) and Stellantis (NYSE: STLA).