Stocks on Wall Street were mostly lower on Thursday, although robust economic growth in the U.S. briefly lifted sentiment, while European markets fluctuated after a series of disappointing corporate results.
A slump came earlier this week after disappointing earnings reports from US electric car giant Tesla and Google owner Alphabet, two of the “Magnificent Seven” that have powered a global rally this year.
Stock markets continued to fall after a number of companies from a wide range of industries – from the automotive industry to luxury groups – published disappointing earnings reports.
Official data on Thursday temporarily brightened sentiment, showing that the U.S. economy grew 2.8 percent on an annual basis in the second quarter, well above the 1.9 percent forecast by analysts, as consumers continued to spend despite high interest rates.
“After a weaker-than-expected first-quarter GDP report, a strong second-quarter result is exactly what investors wanted to see,” said Bret Kenwell, U.S. investment analyst at trading platform eToro.
“Even though this print still needs to be revised, it was a relief,” Kenwell said.
But while the Dow made a small gain, both the broad-based S&P 500 and the technology-heavy Nasdaq plunged.
Among the major technology companies, Amazon and Apple each lost 0.5 percent, while Nvidia lost 1.7 percent.
The other shares of the “Magnificent Seven” also suffered losses: Alphabet lost three percent, Facebook owner Meta slipped 1.7 percent and Microsoft lost 2.5 percent.
“Investors are becoming increasingly nervous ahead of next week’s earnings reports,” said David Morrison, senior market analyst at financial services provider Trade Nation.
– “Investors beware” –
This year’s technology boom was driven by high hopes for artificial intelligence, but analysts warn the party may soon be over.
“The robust rally in the first half of the year has raised high expectations, particularly in the technology sector,” said Fawad Razaqzada, analyst at City Index and Forex.com.
“Investors are concerned about the significant investments in AI by companies like Alphabet, which currently act as a cost rather than a revenue driver,” he said.
Although AI could be profitable in the long term, short-term results have not met expectations, he noted, leading to caution among investors.
In Europe, Paris closed 1.2 percent lower, Frankfurt lost 0.5 percent and Milan lost 2.6 percent. London ended the day with a gain of 0.4 percent.
Shares in French-Italian chipmaker STMicroelectronics fell nearly 14 percent, the worst performance in Paris.
Almost all sectors suffered losses: Jeep owner Stellantis lost 8.7 percent, competitor Renault lost 7.5 percent and Gucci owner Kering also lost 7.5 percent.
In Asia, Tokyo closed down 3.3 percent as a stronger yen added downward pressure on Japanese exporters.
Seoul-based SK Hynix fell nearly nine percent despite strong earnings, while Samsung lost two percent.
Shares of Tokyo-listed Sony also fell, and Japanese investment giant SoftBank, which focuses on AI technologies, lost 9.4 percent.
Next, traders will look to Friday’s release of the personal consumption expenditures price index – the Federal Reserve’s preferred inflation indicator – which could play a role in whether it cuts interest rates in September.
– Key figures around 2015 GMT –
New York – Dow: Plus 0.2 percent to 39,935.07 points (closing)
New York – S&P 500: 0.5 percent less to 5,399.22 (closing price)
New York – Nasdaq: 0.9 percent decline to 17,181.72 (closing price)
London – FTSE 100: Plus 0.4 percent to 8,186.35 (closing price)
Paris – CAC 40: 1.2 percent less to 7,427.02 (closing price)
Frankfurt – DAX: Minus 0.5 percent to 18,298.72 (closing price)
Euro STOXX 50: Minus 1.0 percent to 4,811.28 (closing price)
Tokyo – Nikkei 225: 3.3 percent less to 37,869.51 (closing price)
Hong Kong – Hang Seng Index: Decline of 1.8 percent to 17,004.97 (closing price)
Shanghai – Composite: 0.5 percent down to 2,886.74 (closing price)
Euro/Dollar: Rise to 1.0848 USD from 1.0842 USD on Wednesday
Pound/Dollar: Down to $1.2853 from $1.2905
Dollar/Yen: Down to 153.84 yen from 153.99 yen
Euro/pound: Up to 84.38 pence to 84.08 pence
West Texas Intermediate: Increase of 0.9 percent to USD 78.28 per barrel
North Sea Brent oil: Increase of 0.8 percent to USD 82.37 per barrel
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