The S&P 500 ended the day lower on Thursday, reversing earlier gains as a slump led by Alphabet halted a tech sector rebound. Investors are hopeful that the Federal Reserve might implement several rate cuts this year.
At the close of trading, the Dow Jones Industrial Average gained 81 points, or 0.20%, while the S&P 500 decreased by 0.5%, and the NASDAQ Composite fell by 0.9%.
Tech Sector Struggles with Alphabet Decline; IBM and ServiceNow Show Strength
Alphabet Inc Class A (NASDAQ) dropped over 3%, hampering the tech rebound amid concerns about fierce competition from OpenAI’s new AI-powered search engine.
OpenAI announced Thursday that it is testing this new search engine, intensifying competition with Alphabet’s Google.
Conversely, International Business Machines (NYSE) saw a rise of more than 4% after reporting increased demand for its AI services and raising its annual cash flow forecast. “Management highlighted that the GenAI book of business has grown to over $2B since Watsonx launched a year ago, ahead of expectations,” RBC noted.
ServiceNow Inc (NYSE) jumped 13% following strong quarterly results reported late Wednesday, which exceeded Wall Street expectations and led to an uplift in its annual guidance. Oppenheimer commented that ServiceNow’s strong quarterly results “look sustainable given the prioritization of back-office solutions in 2024 IT budgets and growing adoption of non-Technology workflow solutions.”
Tesla (NASDAQ) also climbed more than 1%, recovering from its biggest one-day slump in nearly four years after posting weak quarterly results.
Economic Indicators: Strong Q2 GDP and Lower Inflation
The U.S. gross domestic product grew by 2.8% in the second quarter, surpassing the forecasted 2% growth and improving from the 1.4% growth seen in the first quarter. The price index, an inflation gauge, decreased to 2.3% from 3.1% in the first quarter.
Signs of slowing inflation have increased expectations that the Federal Reserve might cut rates multiple times this year, starting in September. However, durable goods orders fell by 6.6% in June, compared to the expected 0.3% rise.
Earnings Reports: American Airlines, Ford, and Hasbro
American Airlines (NASDAQ) rose over 4% despite lowering its annual profit forecast due to weaker pricing power and uneven demand trends in certain markets.
Hasbro (NASDAQ) gained 3% after reporting a smaller-than-expected drop in second-quarter revenue. Steady digital gaming demand helped offset a slump in toy sales, and cost-control strategies boosted profit expectations.
In contrast, Ford (NYSE) fell over 18% after disappointing earnings due to a sharp slowdown in automobile sales amid decreased consumer spending.
Lineage Inc. Rises on Nasdaq Debut
Lineage Inc (NASDAQ) climbed more than 3% on its first day of trading on the Nasdaq, closing at $80.65, above its opening price of $82.20. The cold storage company priced its initial public offering at $78 per share.
