Sell off in Tesla & Alphabet weighs heavily on the market

Earnings results from Tesla & Alphabet after the market close on Tuesday US time triggered a selloff in both stocks in the session which dragged other mega tech names down in sympathy.

The broader S&P 500 shed 2.31 per cent on the day, while the tech-heavy Nasdaq gave up 3.64 per cent, their worst session since 2022. The Dow Jones closed 1.25 per cent lower.

Google parent Alphabet slid 5 per cent after the company reported earnings that showed a top & bottom-line beat, but YouTube advertising revenue fell below expectations. Tesla shares fell 12.3 per cent following the company's 7 per cent year-on-year drop in EV auto revenue. The sell off gathered pace on comments from Elon Musk during the post results conference call encouraging those investors who have lost faith in the company to sell.

The falls in Alphabet and Tesla triggered a selloff in the other mega tech names with Nvidia and Meta losing 6.8 per cent and 5.6 per cent respectively, while Microsoft slid 3.6 per cent.

The small cap focused Russell 2000 index finished 2.1 per cent lower, however, the small-cap benchmark is up 7.2 per cent for the month as a clear rotation out of big tech into the cheaper smaller end of the market continues to play out. By comparison, the Dow Jones has gained 1.9 per cent, while the S&P 500 has shed 0.6 per cent and the tech-heavy Nasdaq has fallen 2.2 per cent in the month of July.

According to FactSet, more than 25 per cent of S&P 500 companies have now reported their second-quarter earnings, with approx. 80 per cent beating consensus expectations.

In economic news the US PMI flash manufacturing index fell to 49.5 in July, unexpectedly slipping into contraction territory as new orders, production and inventories declined. Economists had forecast a reading of 51.5, according to Dow Jones.

A Wednesday report also showed that new home sales came in lighter than economists had expected for the month of June.

The July US second quarter GDP, personal consumption, Core PCE price index is due out at 10.30pm AEST.

Turning to US sectors, not surprisingly Tech was the biggest loser on the day closing down 4.14 per cent closely followed by Consumer Discretionary which fell 3.89 per cent. The best performing sector was Utilities which closed 1.16 per cent higher.

Futures

The SPI futures are pointing to a 0.95 per cent fall.

Currency

One Australian dollar at 7.35am was buying 65.80 US cents.

Commodities

Gold has added 0.36 per cent. Silver has lost 0.05 per cent. Copper has fallen 1.24 per cent. Oil has added 0.82 per cent.

Figures around the globe

European markets closed lower. London’s FTSE fell 0.17 per cent, Frankfurt lost 0.92 per cent, and Paris closed 1.12 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei lost 1.11 per cent, Hong Kong’s Hang Seng dropped 0.91 per cent, while China’s Shanghai Composite closed 0.46 per cent lower.

The Australian share market closed 0.09 per cent lower at 7963.72.

Dividends payable

Australian Unity Office Fund (ASX:AOF)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap, Marketech.

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