Stock Market Today: Stocks Tumble on Disappointing Big Tech Earnings
Poorly received quarterly results from Alphabet and Tesla sparked a steep selloff in equities.


Joey Solitro
Markets wobbled once again Wednesday after disappointing earnings from key mega-cap tech stocks fueled concerns that the bull market's AI-driven gains may have gone too far too fast. Some mixed economic news didn't help sentiment either.
Equities gapped lower at the open and stayed in negative territory all session long after quarterly reports from Magnificent 7 stocks Alphabet (GOOGL) and Tesla (TSLA) sparked a selloff in the sector responsible for the majority of the bull market's gains.
Market participants entered second-quarter earnings season looking for indications as to when the massive hype and capital investments surrounding all things AI will begin to pay off. Disappointing results from two of the largest AI players by market cap only added fuel to an ongoing drawdown in pricey mega-cap names.
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Econ news comes in mixed
Traders and investors also had to contend with some more mixed readings on economic activity and the state of the housing market.
S&P Global said its Flash Manufacturing Purchasing Managers Index (PMI) declined to 49.5 in July from 51.6 in June, reaching a six-month low and "signaling a deterioration in business conditions within the goods-producing sector for the first time since December." Readings below 50 indicate contraction.
Meanwhile, its Flash Services PMI rose to 56.0 in July from 55.3 in June, a 28-month high. "The service sector outperformed manufacturing for a fourth straight month, with the sectoral divergence widening to the greatest since June of last year," S&P said.
The data also showed that the average prices for goods and services rose at the slowest rate since January – and the second-slowest rate since October 2020. This is good news in the Fed's fight against inflation.
Elsewhere on the economic calendar, the Census Bureau reported that new home sales came in at a seasonally adjusted annual rate of 617,000 in June, a 0.6% decline from the revised May rate of 621,000 and a 7.4% decline from the same period in 2023. Economists expected new home sales to rise to 640,000.
"The housing market continues to lose momentum," says Wells Fargo economist Jackie Benson. "Despite increased use of builder incentives, pervasively high financing costs appear to be one hurdle that builders cannot overcome at the present moment."
By the closing bell, the broader S&P 500 had its worst session since late 2022, falling 2.3% to 5,427. The tech-heavy Nasdaq Composite also had its worst day since 2022, shedding 3.6% to 17,342. The blue chip Dow Jones Industrial Average fell more than 500 points, or 1.3%, to finish at 39,853.
"Markets are getting punished as investors sell risk assets and pick up safe havens while drifting into hibernation," writes José Torres, senior economist at Interactive Brokers. "For stocks, nothing is working. Despite recent selling, the S&P 500 is still trading close to 22 times earnings amidst quarterly results that aren't impressing investors in aggregate."
Mega-cap tech not so magnificent
Alphabet stock fell 5% despite topping revenue and earnings expectations for its second quarter. The search and advertising giant reported double-digit growth in advertising revenue and over 28% growth in its cloud unit.
Alphabet's total advertising revenue increased 11.1% year-over-year to $64.6 billion, including 13% year-over-year growth at YouTube to $8.7 billion. Still, this was slower than the 13% rise in ad sales seen in Q1, which was the catalyst for today's slumping GOOGL share price.
Alphabet's Q2 results were solid, but second-half comparisons do get tougher for its advertising segments, says Jefferies analyst Brent Thill.
Tesla stock declined 12.3% after the electric vehicle maker reported mixed results for its second quarter. A bottom-line miss is likely one catalyst for Tesla's post-earnings slide, but it was exacerbated by news the company rescheduled its robotaxi event.
Indeed, on Tesla's conference call, CEO Elon Musk said that the company will move its robotaxi unveiling event to October 10. The event was originally scheduled for August 8, but was delayed because Musk wanted to make "important changes to improve the vehicle."
Visa trouble
But perhaps no blue chip had a rougher day than Visa (V). The world's largest payments processor saw shares fall 4% to make Visa stock the worst performer in the price-weighted Dow.
Although Visa remains one of analysts' top-rated Dow Jones stocks, thanks to growth in payments volume, cross-border volume and processed transactions, the financial titan came up short of earnings and revenue estimates for its fiscal 2024 third quarter.
Visa shares are in negative territory on a year-to-date basis, but Wall Street is bullish on the blue chip stock. According to S&P Global Market Intelligence, the average analyst target price for V stock is $304.58, representing implied upside of about 19% to current levels. Additionally, the consensus recommendation is a Buy.
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Dan Burrows is Kiplinger's senior investing writer, having joined the publication full time in 2016.
A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among many other outlets. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange.
Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.
In his current role at Kiplinger, Dan writes about markets and macroeconomics.
Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.
Disclosure: Dan does not trade individual stocks or securities. He is eternally long the U.S equity market, primarily through tax-advantaged accounts.
- Joey SolitroContributor
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