Tech earnings season got off to a disappointing start for investors as the “Magnificent Seven” stocks all fell during the trading week.
Alphabet Inc. reported better-than-expected profit and revenue, but YouTube ad revenue fell short of analysts' expectations, marking the Google parent company's worst week this year.
Tesla missed quarterly profit expectations as lower vehicle prices and restructuring charges hurt its margins. The electric car giant also delayed the launch of its robotaxi vehicle until October. Shares fell 12.3% following the earnings report on Wednesday, marking its worst one-day performance since September 2020.
The tech-heavy Nasdaq 100 index fell for two consecutive weeks for the first time since April.
Among large stocks, Ford Motor Co. and United Parcel Service Co. were the biggest fallers this week, followed by General Motors Co. after it reported disappointing earnings. Among large stocks, 3M Co. and Bristol-Myers Squibb Co. were the big performers, helped by surprise earnings.
Small-cap stocks continued to perform well this week, with the Russell 2000 Index rising for a third straight week, buoyed by rising hopes of upcoming interest rate cuts.
On the macroeconomic front, the U.S. economy grew at a 2.8% annualized rate in the second quarter, accelerating from the first quarter and beating expectations of 2% growth.
Inflation indicators fall
The Federal Reserve's inflation gauge fell to 2.5% in June, the lowest level since February 2021, bolstering market expectations of a rate cut in September.
But according to Comerica Bank economists, the Fed is looking for a more “sustained downward trend” before deciding to cut rates.
Alphabet shares fall
OpenAI is set to release SearchGPT, a tool aimed at challenging Google's dominance in search, and has opened a waiting list of 10,000 people to test the new product.
Easing mortgage interest rates
Mortgage rates have fallen to their lowest since February, with the average 30-year fixed rate falling to 6.62%, as investors bet on future rate cuts. Despite this, homebuyer demand remains weak.
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Benzinga is a financial news and data company based in Detroit.
