[New York Stock Market] Tesla Drops 10%, Semiconductor Stocks Also Falter... Nasdaq Down 2.05%

The three major indices of the U.S. New York stock market closed mixed on the 20th (local time) as they digested the second-quarter earnings of major companies such as Tesla and Netflix. The Dow Jones Industrial Average, composed of blue-chip stocks, continued its nine-day winning streak, while the tech-heavy Nasdaq index plunged by over 2%.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 35,225.18, up 163.97 points (0.47%) from the previous session. In contrast, the large-cap S&P 500 index fell 30.85 points (0.68%) to 4,534.87, and the tech-focused Nasdaq index dropped 294.71 points (2.05%) to 14,063.31.

Within the S&P 500, discretionary consumer goods, technology, communications, and real estate sectors declined, while energy, healthcare, utilities, and financial sectors rose. The discretionary consumer goods sector saw a decline exceeding 3%. Technology and communications stocks also fell by more than 2%. Tesla, which released its earnings after the previous day's close, dropped 9.74%. Although its second-quarter revenue exceeded market expectations, margins shrank due to price cuts, and the management's announcement of a production slowdown in the third quarter due to factory improvement shutdowns had a significant impact. Netflix also fell 8.41% as its second-quarter revenue missed Wall Street estimates despite subscriber growth.

Following disappointing earnings from Taiwan's TSMC, major semiconductor stocks on the New York market, including Nvidia (-3.31%), Intel (-3.16%), AMD (-5.31%), and Qualcomm (-2.98%), all declined. Johnson & Johnson, included in the Dow index, rose nearly 6% after raising its annual guidance due to better-than-expected earnings per share and revenue. This also positively influenced the healthcare sector. American Airlines fell more than 6% despite better-than-expected earnings and guidance. Additionally, Veru Biotech slid nearly 45% after announcing that its influenza vaccine failed to meet targets in Phase 2 trials.

[Image source=Reuters Yonhap News]

Investors are closely watching earnings reports from major companies and economic indicators to find clues about the future economic outlook. Last week, inflation indicators such as the Consumer Price Index (CPI) showed a clear easing trend, reducing concerns about Federal Reserve (Fed) tightening, which has shifted investors' focus toward corporate earnings. In particular, the earnings announcements from Tesla and Netflix after the previous day's close exerted strong downward pressure on tech stocks, confirming a mixed atmosphere across indices.

According to FactSet, second-quarter net profits of S&P 500-listed companies are expected to decline by more than 7% year-over-year, but 74% of the S&P 500 companies that have reported so far have exceeded expectations. Brian Belski, an analyst at BMO Capital Markets, commented, "While the number of people predicting a bear market has definitely decreased, there remain stubborn resistors who do not see this as more than a bear market rally."

The weekly initial jobless claims released on this day defied market expectations by decreasing, indicating that the U.S. labor market remains robust. Last week's claims fell by 9,000 to 228,000, while Wall Street consensus had expected an increase of 3,000. On the other hand, manufacturing indicators were weak. The Philadelphia Federal Reserve Bank's manufacturing index stood at -13.5, indicating contraction (the index uses zero as the threshold between contraction and expansion).

Existing home sales in June decreased by 3.3% from the previous month to 4.16 million units (annualized), marking an 18.9% decline compared to a year ago. However, despite the reduced transaction volume, supply shortages persisted, pushing home prices higher. The median price of existing homes sold in June was $412,000, ranking second highest after the record $413,800 in June last year.

In the New York bond market, Treasury yields rose. The yield on the 10-year U.S. Treasury note hovered around 3.84%, while the 2-year note, sensitive to monetary policy, traded near 4.83%. The Dollar Index, which measures the value of the U.S. dollar against six major currencies, rose more than 0.5% to 100.8.

Fed officials are currently in a blackout period ahead of the July Federal Open Market Committee (FOMC) meeting scheduled for the 25th-26th, refraining from public comments. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds (FF) futures market currently sees the highest probability for a rate pause in September following a baby step hike in July. John Gray, Chief Operating Officer at Blackstone, appeared on CNBC's Squawk Box, noting that inflation concerns that have weighed on the U.S. for over two years are easing, but added, "The Fed will not lower its guard considering the experience of the 1970s."

Oil prices rose. At the New York Mercantile Exchange, August West Texas Intermediate (WTI) crude oil closed at $75.63 per barrel, up 28 cents (0.37%) from the previous day. The September contract, which becomes the front-month the following day, closed at $75.65 per barrel, up 36 cents (0.5%).

This content was produced with the assistance of AI translation services.