Major indexes were sharply lower in afternoon trading Thursday as chip stocks retreated and fresh data releases heightened concerns about the state of the U.S. economy, while investors awaited earnings reports from big tech companies after the closing bell.
The S&P 500 and Nasdaq Composite were down 1.6% and 2.4%, respectively, while the Dow Jones Industrial Average fell 1.5%. Each of the indexes had moved higher in early trading, after posting gains the previous session amid a rally in chip stocks and optimism about the possibility that the Federal Reserve could cut interest rates as soon as next month.
Chip stocks were down sharply Thursday, led by chip designer Arm Holdings (ARM), which plunged 16% after providing weak earnings guidance late Wednesday. AI investor favorite Nvidia (NVDA), which led the previous session’s tech-fueled rally, was down 6% Thursday, while Qualcomm (QCOM), Advanced Micro Devices (AMD) and Micron (MU) also tumbled.
Meta Platforms (META) was the big gainer among tech stocks, up nearly 5%, after the social media giant reported better than expected earnings late Wednesday. Apple (AAPL) and Amazon (AMZN), which are due to report their quarterly results after the closing bell, were down more than 1%.
It’s been a volatile few weeks for tech stocks amid a flurry of earnings reports from ‘Magnificent Seven‘ companies and chipmakers. Tech stocks, which had powered the S&P 500 and Nasdaq to a series of record highs through most of the year, came under pressure in July as investors started rotating into companies that stand to benefit most from an environment of lower interest rates.
Market participants are also keeping a close eye on economic data, as they try to determine how swiftly and deeply the Fed could cut rates.
Numbers released this morning showed that manufacturing activity fell again in July, according to ISM’s purchasing manager’s index, with a steeper decline than economists expected. Manufacturing has been depressed for the past seven quarters, and economists don’t see that changing until the Fed cuts rates. The big data release of the week comes Friday with the monthly jobs report, which follows data Thursday showing a bigger-than-expected rise in weekly jobless claims.
Treasury yields, which are sensitive to expectations around interest rates, are lower Thursday, after falling sharply on Wednesday following Fed Chair Jerome Powell’s comments about the prospects for monetary easing. The yield on the 10-year Treasury dropped below 4% for the first time since February.
Gold is up about 1% to $2,500, a new record high, while crude oil futures were down about 1.5%.
How Meta Eased Wall Street’s AI Spending Worries
1 hr 20 min ago
Meta (META) shares jumped on Thursday as the company’s second-quarter results eased some of Wall Street’s fears about overspending on artificial intelligence.
Meta on Wednesday reported capital expenditures (CapEx) increased 33% in the second quarter to $8.17 billion. It also raised the low end of its 2024 CapEx forecast to $37 billion from $35 billion. It left the upper band of its forecast range at $40 billion.
David Paul Morris / Bloomberg / Getty Images
The company joins a chorus of big tech companies saying they’ve dramatically increased their spending on AI infrastructure and expect to invest even more next year. Alphabet (GOOGL) and Microsoft (MSFT) increased CapEx by 91% and 55%, respectively, in the second quarter.
But the market reacted very differently to each company’s CapEx outlook, a reflection of how quickly the narrative surrounding AI can change on Wall Street.
Read the full article here.
Moderna Shares Down 20% After Revenue Warning
2 hr 26 min ago
Moderna (MRNA) shares plunged after the COVID-19 vaccine maker slashed its outlook on lower demand in Europe and a tough market in the U.S.
The company now expects full-year product revenue of $3 billion to $3.5 billion, down from its earlier estimate of $4 billion. Moderna cited “very low [European Union] sales in 2024, potential revenue deferrals for certain international sales into 2025, and an increasingly competitive environment for respiratory vaccines in the U.S.”
The news sent shares of Moderna down 20%, pulling them into negative territory for the year so far.
TradingView
The guidance came as Moderna reported a second quarter loss of $3.33 per share, and revenue fell 30% to $241 million. Sales of its Spikevax COVID-19 shot slumped 39% to $184 million.
Arm Plunges on Disappointing Guidance
3 hr 52 min ago
Shares of Arm Holdings (ARM) fell sharply after the British chip designer’s light profit guidance overshadowed quarterly results that came in above expectations.
The stock was down 15% in recent trading to a two-month low.
Monitor if bulls can successfully defend an uptrend line that stretches back to the October 2023 low. A successful hold of the indicator could see a resumption of the stock’s longer-term uptrend, while a breakdown may signal a change in trend direction.
Upon a close below the uptrend line, Arm shares could find chart support at key levels including $117, $94, and $79.
Read our full technical analysis here.
Meta Shares Jump on Strong Earnings
5 hr 29 min ago
Shares in Meta Platforms (META) jumped early Thursday after the social media giant’s quarterly results topped Wall Street’s estimates, giving investors confidence that the company’s significant investment in AI is reaping benefits.
Meta shares have remained in a trading range since the stock’s earnings-driven breakaway gap in February.
Post-earnings buying could see the share price test key overhead chart resistance levels at $490 and $530. The measuring principle projects a price target of $640.
Read our full technical analysis here.
Futures Point to Higher Open for Major Indexes
6 hr 34 min ago
Futures tied to the Dow Jones Industrial Average were up 0.2%
TradingView
S&P 500 futures were up 0.6%.
TradingView
Nasdaq 100 futures were also up 0.6%.
TradingView
