Stock Market News From July 24, 2024: Why Is the Nasdaq Down; Dow Falls; Tesla, Alphabet, Nvidia, IBM, AT&T, More Movers; Treasury Yields (2024)

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The Magnificent 7 stocks, as measured by the Roundhill Magnificent Seven exchange traded fund, fell into correction territory.

The losses were due, in part, to earnings yesterday from Alphabet and Tesla that didn’t live up to Wall Street’s high expectations.

Investors are also likely double-guessing their take on artificial intelligence and whether the massive investments will see the payoff they’ve imagined.

Former New York Fed President Bill Dudley, meanwhile, said the Federal Reserve should cut rates in July, sparking questions of whether there's weakness in some pocket of the economy that the markets are missing.

Tech stocks took it on the chin as investors faced a reality check on their artificial intelligence bets after tech earnings.

The Dow Jones Industrial fell 1.3% and the S&P 500 closed down 2.3%. The tech-heavy Nasdaq Composite fell 3.6%, marking its worst one-day loss since October 2022, according to Dow Jones Market Data.

Big tech names collectively lost billions in market value after quarterly results from Alphabet and Tesla disappointed, kicking off the tech earnings season on a sour note. Google-parent Alphabet’s latest performance showed advertising growth is slowing. Its stock fell 5%. Tesla, meanwhile, offered a fourth straight quarter of disappointing earnings.

The bar for both of them was set high. Alphabet’s stock was up 15% in the three months before earnings while Tesla rose a whopping 70.29%. This offered little margin of safety for anything uncertain and made big tech shares susceptible to profit-taking.

The Magnificent 7 stocks, measured by the Roundhill Magnificent Seven exchange traded fund, fell into correction territory, as the fund lost 6.1% . Corrections aren’t always a bad thing. They can be seen as a healthy adjustment after a period of significant gains.

The Nasdaq, which has seen 27 record highs this year, is still more than 500 points away from entering its own correction territory. Although, it might hit its biggest drop of the year tomorrow. It’s already down 7% from its peak on July 10, 2024. The largest peak to trough drop this year that it has to beat was 7.06% from April 11 to April 19.

There’s room for investors to cast doubt and the Nasdaq to fall, especially on the artificial intelligence front.

Sundar Pichai, CEO of Alphabet, which spent $13 billion in capex in the latest quarter, said “there is a time curve in terms of taking the underlying technology and translating it into meaningful solutions across the board both on the consumer and the Enterprise side.”

The questions is, are shareholders, plagued with short-termism, willing to wait that ‘time curve.’

The Nasdaq Composite’s losses accelerated in afternoon trading, with the tech-heavy index down nearly 3.5%.

That would make it the worst day for the index since December 2022, when it fell 3.2%.

Shares of EV maker Tesla are currently the worst performer in the Nasdaq 100. Advertising technology company Trade Desk comes in a close second. Alphabet’s latest performance showed that advertising growth is slowing down. Its stock was down 5%.

Three-fourths of all tech stocks in the Nasdaq 100 were down, too, on the sour sentiment.

Oil futures snap a multi-day losing streak as the EIA reports bigger-than-expected drawdowns in crude oil and product stocks.

Crude stocks fell 3.7 million barrels in a fourth straight weekly draw, while gasoline stocks fell by 5.6 million barrels and distillate inventories were down by 2.8 million barrels. Gasoline demand rose by 673,000 barrels a day to 9.5 million b/d.

"As long as refiners need to make more gasoline, they will have to buy more crude oil, the most important and fundamentally sound math in the oil space," Mizuho's Robert Yawger says in a note.

WTI settles up 0.8% at $77.59 a barrel and Brent rises 0.9% to $81.71. Gasoline settles up 1.5% at $2.4515 a gallon on Nymex.