Alphabet and Tesla plunged following their quarterly earnings reports, dragging the Nasdaq composite down 2.3%—though it fell as much as 2.8% at one point—and pulling the Dow Jones Industrial Average down 1.2%, or more than 600 points, in Thursday morning trading. According to Dow Jones Market Data, the Dow was also cited down 1.1%, or 563 points, as major indexes struggled to lift off their intraday lows. The S&P 500 joined the melee, dropping 1.4%. The market sell-off was further fueled by rising oil prices, with Brent crude topping $101 a barrel amid broad-based declines.
Alphabet Plunge Weighs on the Blue-Chip Dow
Google-parent Alphabet (GOOGL) dove on its latest quarterly results and it’s weighing on the blue-chip index. Alphabet was the worst performer in the Dow, contributing a roughly 142-point drag on the index, Dow Jones Market Data showed. The stock tumbled 6.9% after releasing its latest earnings and is on track for its worst trading day in more than a year.
The tech giant gapped nearly 7% lower and is now trying to find buyers near its rising 200-day moving average. Trading near 319, it has cut its year-to-date gain to less than 3%. Alphabet, which also operates the wildly popular YouTube streaming service and the Waymo self-driving taxi, has corrected nearly 22% from a high of 408.61 set in May. Headed into Thursday’s session, Alphabet’s Relative Strength Rating was a 67 on a scale of 1 to 99, while its three-month RS Rating is weaker at 29, according to MarketSurge.
Energy Price Spikes Compound Market Pressures
Adding substantial pressure to the broader equities sell-off was another spike in oil prices. Brent crude topped the $101 mark as the price jumped nearly 8% in recent action, while West Texas Intermediate surged 7% and was near $93 a barrel. But natural gas was flat at $2.92 per million BTUs.
The rising energy costs weighed directly on transport sectors. The Dow Jones transportation average, which has been a sector leader in the stock market today, eased 0.2% to 22,553 amid higher energy prices. It remains up nearly 4% since the start of the quarter. Trucking leader Werner Enterprises (WERN) fell a lot more than the Dow transports, rolling nearly 4% lower. Volume was running at an almost 60% higher pace than its 50-day average, dipping below a flat base showing an entry point at 45.27. Werner still has a healthy cushion above the rising 50-day line, with earnings expected on July 28 where analysts see the company earning 24 cents a share, up 115% vs. a year earlier, and sales ramping 24% ahead to $931 million.
Honeywell and Chip Gear Counterbalance the Decline
While technology bellwethers led the downturn, select industrial and semiconductor names managed to buck the trend. Honeywell (HON) defied the decline with the biggest gain within the Dow. The expert in climate control rallied 5.5% and marked a session high of 250.27. The company announced a 66% rise in second-quarter earnings at $4.52 a share, despite sales dipping 6% to $9.7 billion. Orders rose 4%, bumping up total backlog to $38 billion, a figure that includes its legacy aerospace technologies segment. Excluding aerospace, the firm’s backlog grew to $20 billion, and Honeywell posted an operating margin of 17.9%, or 12.8% excluding aerospace.
Going against the grain of heavy selling were companies in the semiconductor equipment and data storage spaces. Micron Technology (MU) gained more than 3%. Trading as high as 1,001 at one point, the megacap growth stock is trying to hold above its key 50-day moving average, though shares are still more than 20% below an all-time high of 1,255. Micron holds a topflight 99 Relative Strength Rating on a scale of 1 to 99. According to reports, during the Tesla (TSLA) conference call detailing second-quarter results, Chief Executive Elon Musk thanked Micron for receiving an allocation of its high-demand memory chips used in artificial intelligence data centers. Musk is also boss of Space Exploration Technologies (SPCX), commonly known as SpaceX, which through its xAI subsidiary is also developing its own artificial intelligence business.
Market Breadth and Midcap Trading Activity
Overall market breadth was sharply negative. On the Nasdaq, decliners topped gainers by a nearly 3-1 margin, and losers exceeded winners by the same ratio on the New York Stock Exchange. Volume ran at a 5% higher pace than the same time Wednesday on the Nasdaq. On the New York Stock Exchange, turnover pushed 19% higher.
Among midcaps, coconut water seller Vita Coco (COCO) reversed early gains of more than 1% to nose-dive 6% to 69.91. The stock recently took a big hit by sellers in late June and tripped below its 50-day line, though a new base may be in the works with a high of 85.83 for now. Vita Coco reported a 116% jump in second-quarter profit to 82 cents a share as sales increased 28% to $216.2 million. Shares have risen as much as 62% for the year, and headed into Thursday action in the stock market today, the midcap stock held an enviable 94 Composite Rating on a scale of 1 to 99. Meanwhile, the small-cap Russell 2000 sank 0.9%, escaping the bigger selling seen among large-cap stocks.
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