US stock futures drop as Alphabet, Tesla earnings underwhelm
In the evening hours on Tuesday, U.S. stock index futures experienced a decline, particularly in the technology sector following disappointing second-quarter earnings reports from major companies like Alphabet and Tesla.
After the market closed, significant tech stocks saw a drop, signaling a negative trend for upcoming quarterly financial results. The decrease in technology shares indicated a renewed downturn in the sector, which had been impacted by profit-taking and a shift towards more economically sensitive industries in recent days.
During that time, the futures dropped by 0.4% to 5,576.75 points, while the futures fell by 0.6% to 19,807.0 points as of 19:36 ET (23:36 GMT). Additionally, the futures decreased by 0.2% to 40,529.0 points.
Tesla tumbles as profit disappoints, outlook sours
Tesla Inc (NASDAQ:) underperformed compared to other major tech companies in after-hours trading, dropping almost 8% due to lower-than-expected second-quarter earnings and declining vehicle sales.
The company’s profit margins reached a five-year low as it reduced prices significantly to compete with rising competition in important markets like China.
Expenses surged during the quarter due to higher spending on artificial intelligence and robotaxis, with the latter’s unveiling postponed from August to October.
Alphabet falls despite earnings beat
Alphabet Inc, the parent company of Google, experienced a 2.2% decline in its stock price after reporting second-quarter earnings that surpassed expectations due to increased advertising revenue and strong demand for its cloud services.
However, the growth rate of advertising sales, which is Alphabet’s primary source of revenue, slowed down during the quarter. Additionally, revenue from YouTube fell short of some market forecasts.
Alphabet’s expenses also saw a significant increase compared to the previous year, mainly due to continued investments in AI development. This trend is anticipated to impact profit margins in the upcoming quarters.
The negative performance of Alphabet and Tesla had a ripple effect on the broader tech sector, which was already dealing with substantial losses over the past week.
Following Alphabet’s results, Apple Inc and Microsoft Corporation both saw a post-market decline of around 0.4%, while chipmaker NVIDIA Corporation experienced a 1.5% drop.
Tech rout, political uncertainty keeps Wall St on edge
The Wall Street indexes closed slightly lower on Tuesday as investors remained cautious about upcoming major tech company earnings and uncertainties surrounding the presidential race.
The SP 500 index declined by 0.2% to 5,555.74 points, while the Dow Jones Industrial Average saw a slight decrease to 17,998.97 points. The Nasdaq Composite ended the day down by 0.1% at 40,358.09 points.
Investors were focused on the upcoming earnings reports from companies such as International Business Machines (IBM), Qualcomm Incorporated, ServiceNow Inc, ATT Inc, Ford Motor Company, and General Dynamics Corporation scheduled for Wednesday.
Additionally, market participants were monitoring any new developments in the presidential race following President Joe Biden’s withdrawal and endorsement of Vice President Kamala Harris as the Democratic frontrunner. A Reuters/Ipsos poll indicated that Harris was slightly ahead of Republican nominee Donald Trump.
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