- US stocks dropped Wednesday, with the Nasdaq seeing its steepest single-day loss since 2022.
- Tesla and Alphabet earnings reports disappointed investors and dragged tech lower.
- Investors will be watching for clues about Fed policy in Thursday's second-quarter GDP report.
US stocks dropped on Wednesday, led by a steep sell-off in the tech sector after the first batch of mega-cap earnings disappointed investors.
The major indexes all ended the day lower, with the Nasdaq Composite falling more than 3% to notch its worst trading day in since 2022. The S&P 500 dropped more than 2% and the Dow Jones Industrial Average lost more than 500 points.
Investors were shaken after Tesla and Alphabet reported financials for the second quarter. Tesla shares dropped 12% after the carmaker missed earnings estimates and logged a big drop in auto revenue.
Alphabet shares, meanwhile, fell 5% after the Google parent beat on earnings but reported weaker ad revenue from YouTube and rising capital expenditures during the quarter.
Other mega-cap tech stocks also tumbled in Wednesday's session as investor sentiment soured. Nvidia shares fell almost 7%, while Meta shares ended the trading session 5.6% lower.
"So is the Tech-led bull market over? Is the AI bubble bursting? Or are investors rotating out of Tech into all the laggards? Or is the bull market simply broadening?" Yardeni Research wrote in a note. "For now, we believe that the stock market was overbought and is experiencing a minor selloff."
Investors are waiting on more mega-cap tech earnings, with Meta, Apple, and Amazon set to report their financials next week.
In the meantime, traders are eyeing fresh economic data releases. Second-quarter GDP estimates are due on Thursday, and the personal consumption expenditures price index, the Fed's preferred measure of inflation, is due on Friday. Markets are expecting PCE inflation to slow to 2.5% on an annual basis, while GDP is expected to show the economy grew 2.1% last quarter.
The readings will help inform rate-cut bets as the central bank heads into its two-day policy meeting next week.
Here's where US indexes stood at the 4:00 p.m. closing bell on Monday:
- S&P 500: 5,427.12, down 2.31%
- Dow Jones Industrial Average: 39,853.87, down 1.25% (-504.22 points)
- Nasdaq composite: 17,342.41, down 3.64%
Here's what else happened today:
- The housing market is poised to loosen up as more inventory hits the market and home prices cool, according to Fannie Mae.
- Russia's war-driven economy is a mirage, and more sanctions are needed to keep the pressure on, European finance ministers said.
- Tesla's earnings were tough, but here's why the carmaker could be getting its mojo back, according to Wedbush's Dan Ives.
In commodities, bonds, and crypto:
- West Texas Intermediate crude ticked 0.77% higher to $77.55 a barrel. Brent crude, the international benchmark, dipped 0.12% to $80.72 a barrel.
- Gold edged lower by 0.12% to $2,406 per ounce.
- The 10-year Treasury yield rose nearly five basis points to 4.287%.
- Bitcoin dipped 0.25% to $65,883.