Technology Giants Face Earnings Setbacks
Tech investors started the week on a sour note as the Magnificent Seven companies saw a decline in their stocks during the trading period. Alphabet Inc. reported robust earnings and revenue but fell short on YouTube advertising revenue. This led to a tumultuous week for the Google parent company’s stock.
Tesla’s Tough Quarter
Tesla Inc. failed to meet quarterly earnings forecasts due to slimmer profit margins from lower vehicle prices and restructuring charges. The electric-vehicle manufacturer also pushed back the launch of the Robotaxi to October. Shares plummeted 12.3% in a single day, marking the worst performance since September 2020.
Nasdaq 100 Index Struggles
The tech-heavy Nasdaq 100 index closed the week in the red for the second consecutive time for the first time since April.
Mixed Bag Among Mega-Cap Stocks
While Ford Motor Company and United Parcel Service Inc. experienced substantial declines due to disappointing earnings, 3M Company and Bristol-Myers Squibb Company emerged as top performers with unexpected positive results.
Rallying of Small-Cap Stocks
Small-cap stocks continued to outshine this week, with the Russell 2000 Index notching its third consecutive week of gains, supported by optimism surrounding potential interest rate cuts.
US Economy Shows Strength
In brighter news, the U.S. economy accelerated in the second quarter, growing at an annualized pace of 2.8%, surpassing expectations and building momentum from the previous quarter.
Analysis of US GDP Growth
Chart Of The Week: US GDP Growth Doubled From Q1 To Q2 2024
Additional Market Insights
Inflation Measure Declines: A key inflation metric monitored by the Federal Reserve dropped to 2.5% in June, reaching the lowest levels since February 2021. This solidified expectations of an upcoming rate cut in September.
Alphabet Faces Competition: OpenAI’s upcoming launch of SearchGPT, designed to take on Google’s search dominance, has sparked interest with a 10,000-person waiting list to test the new tool.
Decrease in Mortgage Rates: Mortgage rates have fallen to their lowest levels since February, with the average 30-year fixed interest rate dropping to 6.62%. Despite this, homebuyer demand remains subdued.
Image created using artificial intelligence via Midjourney.