US stocks whipsawed on Thursday as investors regrouped after a Big Tech-led wipeout throughout the prior session, inspired by AI doubts.
The Dow Jones Industrial Average (^DJI) rose 0.6% while the S&P 500 (^GSPC) rose 0.2% on the heels of Wednesday’s steep closing losses. The Nasdaq Composite (^IXIC) erased early session losses of greater than 1.6% to hover near the flatline, after coming off the worst day for the tech-heavy index since October 2022.
Stocks are running right right into a wall as Wall Street starts to question when tech corporations’ huge investments in AI will begin to repay. Unimpressive earnings from Alphabet (GOOGL, GOOG) and Tesla (TSLA) earlier throughout the week have dented hopes that Big Techs can live as much as their AI-fueled sky-high valuations.
The fallout rippled through global stock markets, helped send Europe’s benchmark Stoxx 600 (^STOXX) down over 1%. Nikkei 225 (^N225) sank to a 3%-plus loss on the close, though a sudden yen (JPY/USD=X) gain also drove the Tokyo benchmark into technical correction.
On the similar time, concerns with reference to the robustness of the US economy are emerging as big-name earnings misses solid doubt on how consumers are holding up throughout the face of historically high borrowing costs.
Provided that, traders in the mean time are pricing in greater cuts by the Federal Reserve — a reduction of about 30 basis points by September, and of nearly 70 basis points over 2024, in accordance with money markets. Odds on an earlier-than-expected rate cut in July have also ticked up, CME FedWatch data showed.
An advance estimate of gross domestic product (GDP) showed the US economy grew at an annualized pace of two.8% through the second quarter. That was well above the 2% growth expected by economists surveyed by Bloomberg.
The Personal Consumption Expenditure Price Index update for July on Friday will give the Federal Reserve one other data point to contemplate regarding rate cut timing.
Meanwhile the tech-heavy Nasdaq erased early session losses of greater than 1.5% to hover near the flatline.
Nasdaq losses speed up, Nvidia down greater than 4%
More losses for Nasdaq Composite (^IXIC) on Thursday since the tech-heavy index fell greater than 1%, coming off the worst day slide since October 2022.
Big Tech continued its sell-off with shares of AI chip heavyweight Nvidia (NVDA) down greater than 4%. Meta (META) shares also lost greater than 3% Alphabet (GOOGL, GOOG) declined greater than 2%.
Big Tech stocks under pressure as Nasdaq slides
US stocks regular after steep sell-off on Wall Street
US stocks were regular Thursday after a tech-led wipeout throughout the prior session.
The Dow Jones Industrial Average (^DJI) opened flat, while the S&P 500 (^GSPC) also hugged the flatline following steep closing losses. The Nasdaq Composite (^IXIC) opened barely higher after losing greater than 3% throughout the prior session.
The selloff came after unimpressive results from Google parent Alphabet (GOOGL, GOOG) and EV giant Tesla (TSLA) earlier throughout the week.
GDP: US economy grows at faster than expected pace in second quarter as inflation eases
The US economy grew at a faster-than-expected pace throughout the second quarter.
The Bureau of Economic Evaluation’s advance estimate of second quarter US gross domestic product (GDP) showed the economy grew at an annualized pace of two.8% through the period, well above the 2% growth expected by economists surveyed by Bloomberg. The reading came in higher than first quarter GDP, which was revised right all the way down to 1.4%.
Meanwhile, the “core” Personal Consumption Expenditures index, which excludes the volatile food and energy categories, grew by 2.9% in the first quarter, above estimates of two.7% but significantly lower than 3.7% gain throughout the prior quarter.
What to have a look at on Chipotle
Chipotle (CMG) had a great quarter little query, but some chatter out this morning from the Street is voicing just a few concerns.
For one, the burrito company called out slowing sales growth quarter up to now. There was consumer resistance mentioned to higher prices in California following the state’s wage hikes. And margin guidance was pulled in a bit as Chipotle invests in portion sizes to quiet the concerns of TikTokers.
