Markets on Wall Street logged losses in early trading Wednesday as the tech sector was dragged down by some uninspiring earnings from high-profile companies.
Futures for the S&P 500 slipped 0.9% before the bell and futures for the Dow Jones Industrial Average fell 0.5%. The tech-heavy Nasdaq tumbled 1.3%.
Electric vehicle maker Tesla’s second-quarter net income fell 45% compared with a year ago as the company’s global electric vehicle sales tumbled despite price cuts and low-interest financing. Its shares were down 8.5% in premarket trading early Wednesday.
Alphabet Inc., Google’s parent company, delivered another quarter of steady growth amid an AI-driven shift in the ubiquitous search engine that is the foundation of its internet empire. But its YouTube ad revenue did not meet expectations, and its shares fell 3.5% before the bell.
Expectations are high as earnings season ramps up and analysts are forecasting the strongest profit growth for S&P 500 companies broadly since late 2021, according to FactSet.
FILE – Currency traders watch computer monitors near the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Friday, July 19, 2024. Asian stocks mostly fell on Wednesday, July 24, as markets digested Japanese and Australian business data, after U.S. stocks held relatively steady as earnings reporting season ramped up for big companies. (AP Photo/Lee Jin-man, File)
Photo: ASSOCIATED PRESS/Lee Jin-man
However, investors appeared unimpressed so far.
“The first view on Big Tech earnings wasn’t inspiring,” Ipek Ozkardeskaya, an analyst with Swissquote Bank, said in a commentary.
Shares of Paris-based luxury giant LVMH sank 4% in early trading after the owner of Louis Vuitton and Dior reported quarterly sales that missed market expectations.
Ford Motor company releases its latest results after the bell Wednesday.
Later this week, investors will be juggling the deluge of earnings reports along with some important economic data.
On Thursday, the government releases its first estimate on gross domestic product in the U.S. during the second quarter. On Friday, all eyes will be on the latest inflation data contained in the government’s consumer spending report. Personal consumption expenditures, or PCE, is the Federal Reserve’s preferred measure of inflation and part of the broader economic data the Fed uses when making monetary policy.
With inflation slowing, the wide expectation is for the Federal Reserve to begin lowering its main interest rate in September. That would offer some relief for both the economy and financial markets after the Fed has held the federal funds rate at the highest level in more than two decades.
Few experts think the Fed will cut rates at its next meeting later this month.
Elsewhere, in Europe at midday Germany’s DAX lost 0.7%, while the CAC 40 in Paris was down 0.9%. In London, the FTSE 100 was largely unchanged.
In Asian trading, Japan’s benchmark Nikkei 225 slipped 1.1% to 39,154.85, with the Japanese yen trading at its highest level in weeks ahead of a Bank of Japan policy decision next week.
The U.S. dollar was trading over 162 yen earlier this month but the Japanese currency has strengthened in recent days after officials intervened to staunch the yen’s decline. Expectations that the BOJ may raise its near-zero interest rate, and that the Federal Reserve may in turn cut rates, have helped support the yen, which has languished as the gap between U.S. rates and those in Japan widened.
A stronger yen hurts earnings of major exporters when they are brought home and also makes Japanese products less competitive in overseas markets.
Early Wednesday, the dollar was trading at 154 yen, down from 155.59 yen late Tuesday.
A business survey released on Wednesday showed Japan’s factory activity contracted in July, as weak demand weighed on the manufacturing sector. Services were on the rise, helping to drive growth in overall activity in Japan’s private sector.
Elsewhere, Hong Kong’s Hang Seng lost 0.9% to 17,311.05, led by the Hang Seng Tech Index which sank 1.5%. The Shanghai Composite shed 0.5% to 2,901.95.
Australia’s S&P/ASX 200 edged 0.1% lower to 7,963.70 after its services sector saw weaker growth in July. Manufacturing improved slightly but remained in contractionary territory.
South Korea’s Kospi dropped 0.6% to 2,758.71, as heavyweight Samsung Electronics plunged 2.3% after talks between the company and its largest workers’ union ended with no agreement. Earlier this month, the workers declared an indefinite strike to pressure the company to accept their calls for higher pay and other benefits.
In other dealings, U.S. benchmark crude oil gained 98 cents to $77.94 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, gained 84 cents to $81.85 per barrel.
The euro was unchanged at $1.0851.
On Tuesday, the S&P 500 slipped 0.2%. The Dow Jones Industrial Average edged 0.1% lower and the Nasdaq composite dipped 0.1%.
But the smaller stocks in the Russell 2000 continued their big run and rose 1%. They’ve zoomed higher amid hopes for coming cuts to interest rates.
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