Wednesday saw a sharp decline in global stock markets due to several underwhelming corporate results from Europe and the US. The decline occurred following the release of second-quarter earnings from US electric vehicle manufacturer Tesla, one of the “Magnificent Seven” stocks propelling a global rally this year.
The tech-heavy Nasdaq Composite index fell 2.5 percent in late morning trading, leading to a decline in Wall Street’s major indices. The markets in Asia and Europe closed down.
Briefing.com analyst Patrick O’Hare states, “The reasons for the weakness are pretty clear cut.” He cites Tesla’s report, which shows that aggressive AI investment and price reductions caused profits to drop by 45% in the second quarter.
Despite the fact that the company exceeded profit and revenue expectations overall, O’Hare attributed the roughly 4% decline in Alphabet’s shares, the parent company of Google, to lower-than-expected ad revenue at YouTube. As one of the so-called Magnificent Seven tech kings, Alphabet has also played a significant role in market gains that have propelled Wall Street to numerous record highs in 2024.
Over the coming weeks, the other companies Apple, Amazon, Microsoft, Nvidia, and Facebook parent Meta are expected to release their financial results. According to Swissquote Bank senior analyst Ipek Ozkardeskaya, the first assessment of Big Tech earnings wasn’t encouraging.
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