US stocks were mixed on Thursday with the Nasdaq Composite continuing to slide following a Big Tech-led wipeout in the prior session, inspired by AI doubts.
The Nasdaq Composite (^IXIC) fell as much as 1%, coming off the worst day for the tech-heavy index since October 2022. The Dow Jones Industrial Average (^DJI) rose 0.3% while the S&P 500 (^GSPC) slid 0.3%, on the heels of Wednesday’s steep closing losses.
Stocks are running into a wall as Wall Street starts to question when tech companies’ huge investments in AI will start to pay off. Unimpressive earnings from Alphabet (GOOGL, GOOG) and Tesla (TSLA) earlier in the week have dented hopes that Big Techs can live up to 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 at the close, though a sudden yen (JPY/USD=X) gain also drove the Tokyo benchmark into technical correction.
At the same time, concerns about the robustness of the US economy are emerging as big-name earnings misses cast doubt on how consumers are holding up in the face of historically high borrowing costs.
Given that, traders are now pricing in bigger cuts by the Federal Reserve — a reduction of about 30 basis points by September, and of almost 70 basis points over 2024, according to money markets. Odds on an earlier-than-expected rate cut in July have also ticked up, CME FedWatch data showed.
Read more: 32 charts that tell the story of markets and the economy right now
An advance estimate of gross domestic product (GDP) showed the US economy grew at an annualized pace of 2.8% during 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 another data point to consider regarding rate cut timing.
On the corporate front, Ford (F) shares tumbled after the automaker posted a quarterly profit miss.
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US stocks steady after steep sell-off on Wall Street
US stocks were steady Thursday after a tech-led wipeout in 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 slightly higher after losing more than 3% in the prior session.
The selloff came after unimpressive results from Google parent Alphabet (GOOGL, GOOG) and EV giant Tesla (TSLA) earlier in the week.
On Thursday, Ford (F) shares tumbled after the automaker posted a quarterly profit miss.
Investors assessed a hotter-than-expected second quarter GDP reading released prior to the market open.
An advance estimate of second quarter US gross domestic product (GDP) showed the economy grew at an annualized pace of 2.8% during the period, more than the 2% growth expected by economists.
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 in the second quarter.
The Bureau of Economic Analysis’s advance estimate of second quarter US gross domestic product (GDP) showed the economy grew at an annualized pace of 2.8% during 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 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 2.7% but significantly lower than 3.7% gain in the prior quarter.
What to watch on Chipotle
Chipotle (CMG) had a great quarter no doubt, but some chatter out this morning from the Street is voicing a couple of concerns.
For one, the burrito company called out slowing sales growth quarter to date. 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 worries of TikTokers.
