Market Review 24th July 2024
Simplify the craziness
DAILY REVIEW
N
2 min read
July 23, 2024 - U.S. stocks took a significant hit on Wednesday, with the Nasdaq Composite experiencing its steepest single-day decline since 2022. The tech-heavy index plummeted more than 3%, while the S&P 500 logged its worst day since December 2022, dropping over 2%. The Dow Jones Industrial Average also suffered, losing more than 500 points.
Summary of Market Performance
At the close on Wednesday:
S&P 500: Down 2.31%, closing at 5,427.12
Dow Jones Industrial Average: Down 1.25% (-504.22 points), closing at 39,853.87
Nasdaq Composite: Down 3.64%, closing at 17,342.41
Tech Titans Tumble
The sharp decline was driven primarily by underwhelming earnings reports from two major tech companies: Tesla and Alphabet.
Tesla: Shares of the electric vehicle giant plummeted 12% after missing earnings estimates for the fourth consecutive quarter. The company also reported a significant drop in auto revenue, further disappointing investors.
Alphabet: The Google parent company's shares fell 5% despite beating earnings expectations. The decline was attributed to weaker ad revenue from YouTube and rising capital expenditures, reflecting the high costs associated with the ongoing AI race.
Other tech giants followed suit, with Nvidia and Meta dropping nearly 7% and 5.6%, respectively, while Microsoft slid 3.6%.
Broader Market Reaction
The sell-off extended beyond tech, affecting other sectors as well. Luxury goods company LVMH hit a six-month low due to concerns about slowing growth in China. Deutsche Bank also faced pressure after reporting its first quarterly loss in four years and pausing share repurchases.
Bank of Canada's Rate Cut
In contrast to the U.S. market turmoil, the Canadian TSX outperformed the S&P 500. The Bank of Canada cut interest rates again, lowering its policy rate to 4.5% from 4.75%. This decision, aimed at supporting consumer spending and controlling inflation, pushed the Canadian dollar to a three-month low against the U.S. dollar.
Economic Data and Outlook
Investors are now turning their attention to upcoming economic data. The advanced estimate of second-quarter GDP and the personal consumption expenditures price index (PCE) are due soon. These reports are crucial as they will influence the Federal Reserve's decisions on future rate cuts.
Sector and Stock Highlights
Biggest Losers:
Tesla (TSLA): -12%
Alphabet (GOOGL): -5%
Nvidia (NVDA): -7%
Meta (META): -5.6%
Microsoft (MSFT): -3.6%
Economic Indicators:
U.S. PMI flash manufacturing output index fell to 49.5, indicating contraction.
New home sales for June came in below expectations.
Conclusion
The dramatic sell-off underscores the high expectations placed on mega-cap tech stocks and the sensitivity of the market to any signs of weakness in their performance. Despite the downturn, some analysts view this pullback as an opportunity within an overall bull market, suggesting that investors might find value in the current volatility.
As the earnings season continues and more economic data is released, market participants will be closely watching for signs of stability and potential growth opportunities.
