As quarterly earnings from major tech companies wrap up, Wall Street faces growing concerns. The Nasdaq Composite has fallen 3.4% this week, extending its three-week decline to 8.8%, the worst performance for the index since September 2022.
Key Points:
Tech Sector Performance:
- Nasdaq Slump: The Nasdaq’s recent downturn marks its worst performance since the market turbulence of late 2022, driven by soaring inflation and rising interest rates.
- Tech Recovery: Despite a strong 2023, with the Nasdaq up 43% and a record high last month, this year has seen a 12% gain so far. However, recent earnings reports have been disappointing.
Economic Concerns:
- Labor Market Slowdown: Recent Labor Department data revealed slower job growth and a rise in unemployment, compounding worries about the U.S. economy’s health.
- Economic Impact on Tech: Big tech companies, such as Amazon and Apple, are now feeling the pinch of a slowing economy.
Company Earnings Highlights:
- Amazon:
- Performance: Amazon’s stock dropped 8.8% this week, extending its three-week decline to 14%.
- Revenue Issues: The company missed revenue targets and issued a cautious forecast, attributing the shortfall to a shift in consumer spending towards cheaper goods.
- Apple:
- Performance: Apple reported modest growth, with stock rising slightly despite recent declines.
- Earnings: Apple beat earnings and revenue estimates but faced a more than 5% drop in the prior two weeks.
- Microsoft:
- Performance: Microsoft fell 4% this week and is down 10% over the past three weeks.
- Forecast: The company issued a weaker-than-expected forecast and missed growth targets for its Azure cloud segment.
- Alphabet:
- Performance: Alphabet’s shares were down slightly this week following a 10% drop in the previous weeks.
- Earnings: YouTube advertising revenue missed estimates, and overall ad growth lagged behind Meta.
- Meta:
- Performance: Meta’s stock rose nearly 5% this week after a strong earnings report and optimistic forecast.
- AI Investments: CEO Mark Zuckerberg highlighted the positive impact of AI on ad relevance and marketing effectiveness.
Upcoming Reports:
- Nvidia: Set to report results on August 28, Nvidia’s stock has fallen 17% over the Nasdaq’s three-week slump but remains up 110% year-to-date. The company is heavily reliant on AI infrastructure spending.
- Intel: Intel’s stock suffered its worst day in 50 years, plummeting 26% after a significant earnings miss and a major restructuring plan, including a 15% workforce reduction.
Analyst Sentiment:
- Intel’s Challenges: Analysts express skepticism about Intel’s restructuring efforts and the potential for overcoming its current difficulties.
As Wall Street navigates these turbulent times, tech giants face mounting pressure from both economic slowdowns and disappointing earnings reports
