Traders work on the floor of the New York Stock Exchange (NYSE) on July 24, 2024 in New York City.
Spencer Platt | Getty Images
Stock futures rose Wednesday night after a sharp tech-driven sell-off dragged the Nasdaq Composite and the S&P 500 to their worst session since 2022.
Futures tied to the Dow Jones Industrial Average added 85 points, or 0.2%. S&P 500 futures rose 0.2%, while Nasdaq 100 futures advanced 0.3%.
In after-hours trading, Ford Motor shares tumbled about 10% after the company’s second-quarter earnings came in much lower than analysts had expected. Chipotle, meanwhile, added roughly 3% after topping earnings and revenue expectations as it saw higher traffic at its restaurants. IBM and ServiceNow jumped about 2.4% and 7.1%, respectively, after beating expectations.
Wednesday’s trading session saw intense declines for the S&P 500 and the Nasdaq Composite, driven by disappointing quarterly reports from Alphabet and Tesla, which led other heavyweight tech stocks and artificial intelligence darlings like Nvidia and Microsoft to fall in sympathy. Both the broad-market index and the tech-heavy benchmark posted their worst session since 2022, while the Dow Jones Industrial Average shed roughly 504 points to end the day.
Investors have been viewing the recent declines as a sign of an overdue correction in an overbought market, which is now seeing a rotation away from megacap tech into small-cap stocks and more cyclical areas of the market.
“We do have a lot of uncertainty right now … Also, I would call it an air of skepticism in terms of what [artificial intelligence] can deliver in terms of profitability and productivity, at least in the near term. And the market right now is a very much in a ‘show me’ state and wants to see this happen or see proof on a more accelerated timeframe,” Yung-Yu Ma, chief investment officer for BMO Wealth Management, said on CNBC’s “Closing Bell.”
There are healthy areas of the market, such as cruise lines and U.S. infrastructure, Ma said, however. He added that megacap technology names will still “struggle for a while” until they can regain their footing and have more proof come forward about their AI-related results.
Although some major tech names missed expectations this week, an overall positive earnings season so far is propping up investor enthusiasm. More than 25% of companies in the S&P 500 have reported their second-quarter earnings, according to FactSet data.
Thursday will see an additional slew of financial results from American Airlines, Northrop Grumman, Honeywell and Hasbro, among several other companies. Jobless claims data, and preliminary second-quarter GDP data will also be released before market open.
Utilities sector shone while tech burned on Wednesday
Investors fled tech on the heels of disappointing quarterly results from a couple of big names, but utilities emerged as a bright spot amid the market sell-off.
The utilities sector jumped 1.16% on Wednesday, buoyed by NextEra Energy, up 4.6% and Eversource Energy, up 3.6%. Consolidated Edison rounded out the top three names with a 2.8% gain.
NextEra’s climb was powered by a second-quarter beat on adjusted earnings, which came in at 96 cents a share, versus consensus estimates for 95 cents a share, per FactSet.
The information technology sector, however, posted a 4.14% decline and its worst daily performance since Sept. 13, 2022. Big losers in that corner of the market include Broadcom, off 7.6%, and Nvidia, down 6.8%. Alphabet‘s 5% decline after quarterly results contributed to a nearly 3.8% slide for the communications services sector.
—Darla Mercado, Chris Hayes
Ford, ServiceNow, Chipotle are biggest movers in after-hours trading
Check out the companies making headlines after Wednesday’s market close:
- Ford Motor — Ford shares tumbled 11% after the company’s second-quarter earnings came in much lower than Wall Street expected due to longtime warranty issues. The automaker posted adjusted earnings per share of 47 cents, significantly less than analysts’ forecast of of 68 cents, per LSEG. Automotive revenue came out at $44.81 billion, slightly higher than the consensus call for $44.02 billion.
- ServiceNow — The software company jumped 6%. ServiceNow posted second-quarter adjusted earnings of $3.13 per share on revenue of $2.62 billion. Analysts polled by LSEG called for earnings of $2.84 per share and revenue of $2.61 billion.
- Molina Healthcare — The managed care company jumped 13%. Molina reaffirmed its full-year guidance for adjusted earnings of at least $23.50 per share, compared to consensus estimates of $23.09 per share, according to FactSet. Second-quarter results also beat expectations on the top and bottom lines.
For the full list, read here.
— Pia Singh
