NEW YORK: The S&P 500 and Nasdaq fell on Thursday (July 20), weighed down by drops in Tesla and Netflix following their quarterly results, but the Dow advanced for a ninth straight day thanks to gains in Johnson & Johnson following a strong annual forecast.
Tesla’s shares tumbled 9.74%, its biggest one-day percentage drop since April 20, after the electric-vehicle maker reported a drop in its second-quarter gross margins to a four-year low and CEO Elon Musk hinted at more price cuts.
Netflix slumped 8.41% to suffer its biggest one-day percentage decline since Dec 15, after the streaming video company’s quarterly revenue fell short of estimates.
“The news last night in Tesla and Netflix, while it’s not the end of the world does give people a reason to wake up and go ‘wow, maybe I shouldn’t be chasing these names up here’,” said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.
“Let me take some money off the table and redeploy it into big boring names.”
The Dow, however, was able to climb as Johnson & Johnson gained 6.07% after reporting results and announcing an annual profit forecast raise.
The Dow Jones Industrial Average rose 163.97 points, or 0.47%, to 35,225.18, the S&P 500 lost 30.85 points, or 0.68%, to 4,534.87 and the Nasdaq Composite dropped 294.71 points, or 2.05%, to 14,063.31.
The decline for the Nasdaq was its largest one-day percentage fall since March 9, while the Dow registered its ninth straight session of gains, its longest winning streak since September 2017.
The Nasdaq has surged 34.4% this year to levels not seen since early April 2022, supported by a seemingly unstoppable rally in megacap growth names such as Nvidia and Meta on optimism over the potential of artificial intelligence, a US economy that has proven more resilient than many anticipated and expectations the end of then Federal Reserve’s aggressive rate increase cycle was on the horizon.
The S&P technology, communication services and consumer discretionary sectors each dropped at least 2% on Thursday.
Tech shares saw additional pressure after business software maker SAP trimmed its full-year outlook for cloud revenue. US-listed shares of SAP closed down 6.34%.
Economic data on Thursday indicated the labour market remains tight, while the housing and manufacturing sectors continue to slump.
United Airlines advanced 3.23% after lifting its full-year profit outlook and posted its highest ever quarterly earnings on booming demand for international travel. – Reuters