HE GIST (“THE WHAT”)
Disappointing results by Netflix and Tesla sparked a sell-off in technology stocks, weighing down on the broader index. Yields jumped following fresh round of economic data that supported ‘higher for longer’ Fed’s policy stance, further dampening sentiment. The S&P 500 index fell 30.85 points (0.68%) to close at 4534.86.
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Trading Plans for THU. 07/20: Earnings Exuberance Evaporating?
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THE DETAILS (The “How & Why”):
The U.S. weekly jobless claims fell unexpectedly to a 2-month low, suggesting a strong labor market that supports the Fed’s ‘higher for longer’ interest rate policy stance. U.S. June existing home sales also fell to a 5-month low and declining 3.3% month-over-month. Yields rose across the board hurting tech stocks the most, with the 10-year Treasury yield settling 10.4 basis point higher at 3.852%.
Netflix slipped 8.41% after the streaming giant projected weaker-than-expected third quarter revenue, overshadowing growth in subscriber base. Tesla also tumbled 9.74% after the EV reported revenue and earnings beat, but margins fell by 10% on the back of price cuts.
Semiconductor stocks also pulled back after Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker, cut its full-year revenue outlook and projected a sharp 10% fall in sales this year. Applied Materials and Advanced Micro Devices slipped more than 5% each. ON Semiconductor, Microchip Technology, Lam Research LRCX, and NXP Semiconductors all closed more than 3% lower.
Discover Financial Services led the broader index lower, tumbling 15.92% after the financial services company announced the suspension of its share buybacks while being in discussion with regulators regarding misclassification of its credit cards.
Capping the losses, Zions Bancorp led the gainers within the index, soaring 10% after reporting second quarter total deposits of $74.32 billion, solidly above the wall street’s consensus of $68.49 billion. Johnson & Johnson was another strong gainer of the session, jumping 6.1% on the back of strong earnings.