The S&P 500 and Nasdaq decreased on Thursday due to Tesla and Netflix reporting disappointing quarterly results. However, the Dow continued to rise as Johnson & Johnson had a strong annual forecast.
Tesla’s shares fell by 9.74%, the largest one-day drop since April 20, after the company reported a decrease in second-quarter gross margins and CEO Elon Musk hinted at more price cuts.
Netflix slumped by 8.41%, suffering its biggest percentage decline since December 15, after its quarterly revenue fell short of estimates.
“The news last night in Tesla and Netflix, while not catastrophic, gives people a reason to reconsider these stocks,” said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.
“Let me take some money off the table and invest it in more stable companies.”
The Dow, however, continued its winning streak as Johnson & Johnson reported positive results and raised its annual profit forecast by 6.07%.
The Dow Jones Industrial Average increased by 0.47%, the S&P 500 decreased by 0.68%, and the Nasdaq Composite dropped by 2.05%.
It was the largest one-day fall for the Nasdaq since March 9, while the Dow achieved its longest winning streak since September 2017.
The Nasdaq has grown by 34.4% this year, mainly fueled by megacap growth companies like Nvidia and Meta that focus on artificial intelligence and positive economic expectations.
On Thursday, the S&P technology, communication services, and consumer discretionary sectors each dropped by at least 2%.
Tech shares faced additional pressure as business software maker SAP lowered its full-year outlook for cloud revenue, causing U.S.-listed shares of SAP to close down by 6.34%.
Thursday’s economic data revealed a tight job market, while the housing and manufacturing sectors continued to decline.
United Airlines saw a 3.23% increase in stock price after raising its full-year profit outlook and reporting record quarterly earnings due to high demand for international travel.
Refinitiv data showed that with 77 S&P 500 companies reporting results, second-quarter earnings are expected to decline by 7.9%, more than the initial forecast of a 5.7% fall.
Trading volume on U.S. exchanges reached 11.16 billion shares, higher than the 10.6 billion average over the past 20 trading days.
Declining stocks outnumbered advancing ones by a ratio of 1.53-to-1 on the NYSE and 1.88-to-1 on Nasdaq.
The S&P 500 recorded 32 new 52-week highs and 2 new lows, while the Nasdaq Composite had 67 new highs and 71 new lows.
