T&G Market Recap: US Stocks Dip as Big Tech Earnings Unfold 📈

Alphabet and Tesla report mixed results, while investors eye upcoming earnings and Fed rate decision 👀

US Stocks Slip as Big Tech Earnings Kick Off 👀

The US stock market experienced a slight downturn on Tuesday, as investors digested the first wave of Big Tech earnings reports from Alphabet (GOOGL, GOOG) and Tesla (TSLA). The benchmark S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) dropped 0.2% and 0.1%, respectively, while the tech-heavy Nasdaq Composite (^IXIC) finished the day just below the flatline.

Mixed Results from Alphabet and Tesla 🤷‍♂️

Alphabet, the parent company of Google, reported a beat on both the top and bottom lines, with overall revenue jumping 14% year over year. The company’s search and cloud businesses drove the growth, with the cloud unit exceeding $10 billion in quarterly revenues and $1 billion in operating profit for the first time. However, network revenue, services revenue, and subscriptions, platforms, and devices revenue fell short of estimates. Shares initially traded flat but gained about 1% as investors digested the results.

Tesla, on the other hand, missed earnings expectations in the second quarter but delivered a beat on the top line with revenue hitting $25.50 billion. Gross margin came in strong at 18%, ahead of consensus calls of 17.4%. However, a miss on free cash flow, capital expenditure, and operating income led to a drop in the stock in after-hours trading, with shares down more than 5%.

Other Earnings Reports 📰

Earlier in the session, investors assessed earnings from General Motors (GM) and Coca-Cola (KO). GM shares closed down about 6%, while Coca-Cola finished the day flat.

Market Trends 📊

The market has been experiencing a rotation away from megacaps, which have fueled this year’s rally. Small caps have benefited as a result, with the Russell 2000 (^RUT) up 3% over the past two days.

Volatility Ebbs 💮

Volatility around the US presidential election has decreased over the past two days, with Vice President Kamala Harris projected to have secured delegate backing to become the Democratic presidential nominee. This has helped settle any remaining nerves over President Joe Biden’s withdrawal from the race.

What’s Next 👀

As the earnings season continues, investors will be closely watching the reports from other Big Tech companies, including Amazon (AMZN), Apple (AAPL), and Facebook (FB). The market will also be keeping an eye on the Federal Reserve‘s interest rate decision and the GDP growth rate for the second quarter.