Nasdaq Crashes As Netflix And Tesla Sink, Dow Roars And Dollar Rallies: What's Driving Markets Thursday?

Zinger Key Points
  • The Dow is on track to hit its ninth straight sessions of gains, while tech stocks sink.
  • Tesla and Netflix tumbled 8% and 9% on the day, while blue-chip players such as Johnson & Johnson rallied.

Thursday was a volatile session for tech stocks as of midday trading in New York, with the Nasdaq 100 falling 1.5% as investors negatively react to second-quarter results from Tesla TSLA and Netflix NFLX.

The tech-heavy index is on track to suffer its worst trading session in more than a month.

On the other hand, a solid earnings beat by Johnson & Johnson JNJ lifted the blue-chip Dow Jones Index up 0.9%, putting it on course for its ninth consecutive session of gains, the longest winning run since September 2017.

On the macro front, jobless claims came in below expectations last week, signaling a still-resilient job market. Speculators upped their bets for another rate hike after July, hedging from some unexpectedly hawkish remarks as the Federal Reserve meets next week. Both the dollar and short-term Treasury yields rallied.

Cues From Thursday's Trading:

The tech-heavy Nasdaq 100 was the weakest link on Thursday, down 1.5%. The S&P 500 contained losses, down 0.3%, while small caps in the Russell 2000 Index slipped 1%.

The Dow was the outlier, up 0.8%, as health care, consumer staples and utilities outperformed other sectors.

US Index Performance On Wednesday

Index Performance (+/-)Value
Nasdaq 100-1.53%15,572.28
S&P 500-0.32%4,582.75
Dow Industrials+0.78%35,321.90
Russell 2000+0.45%1,965.17

Analyst Color:

Investors continue to buy stocks despite the Fed overhang, and one analyst sees the rally continuing until problems crop up in earnings reports.

"Valuations are getting to lofty levels, especially given the hawkish Fed, and central banks around the globe in general, this time not only raising overnight rates but also running down their massive balance sheet," said fund manager Louis Navellier.

"But for now, until problems show up in earnings there are clearly more buyers than sellers and the question appears to be not whether to buy or not, but what to buy," he added.

Thursday’s Trading In Major US Equity ETFs: In midday trading on Thursday, the SPDR S&P 500 ETF Trust SPY was 0.4% lower to $453, the SPDR Dow Jones Industrial Average ETF DIA rose 0.8% to $353 and the Invesco QQQ Trust QQQ was 1.67% lower to $379, according to Benzinga Pro data.

The Consumer Discretionary Select Sector SPDR Fund XLY plummeted 2.6%, the Technology Select Sector SPDR Fund XLK fell 1.5%, and the Communication Services Select Sector SPDR Fund XLC lost 1.4%, implying a red day for growth-related stocks.

The Health Care Select Sector SPDR Fund XLV jumped 1.9%, the Utilities Select Sector SPDR Fund XLU was 1% higher and the Energy Select Sector SPDR Fund XLE edged 0.9% higher.

Latest Economic Data:

The Labor Department reported 228,000 initial jobless claims for the week ending July 15, down from 237,000 in the prior week and below the 242,000 expected.

The Philadelphia Fed Manufacturing Index fell from -13.7 in June to -13.5 in July, weaker than market predictions of -10 and pointing to an overall downturn in manufacturing activity in Philadelphia.

The National Association of Realtors reported that existing home sales dropped 3.3% to a seasonally adjusted annualized rate of 4.16 million units in June of 2023, marking the lowest level in five months and missing forecasts of 4.2 million.

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Stocks In Focus:

  • Tesla, Inc plummeted over 8% and Netflix, Inc. over 9% following the release of their quarterly results.
  • Taiwan Semiconductor Manufacturing Company Ltd. TSM slid more than 5% as chipmaker sales are expected to fall 10% this year, and a planned Arizona facility would miss its objective of beginning major production next year.
  • Discover Financial Services, Inc. DFS plunged over 15% after the company paused buybacks and disclosed regulatory scrutiny.
  • Equifax, Inc. EFX tumbled 10% as the credit reporting agency reduced its revenue and profit outlook for the year due to a weaker U.S. mortgage market.
  • Zions Bancorporation ZION rose by nearly 10% in Thursday morning trading, extending gains after reporting better-than-expected earnings on Wednesday and after Goldman Sachs, Morgan Stanley and other firms raised their price targets on the bank.
  • American Airlines, Inc. AAL fell 6.3% despite beating earnings expectations, as the company disappointed on full-year guidance.
  • Companies reporting after the close include CSX Corp. CSX and Capital One Financial Corp. COF.

Commodities, Bonds, Other Global Equity Markets:

Crude oil ticked 0.7% higher, with a barrel of WTI-grade crude trading at $75.80. The United States Oil Fund ETF USO was 0.7% higher to $68.10.  

Treasury yields rose, with the 10-year yield up by 12 basis points to 3.87%, and the two-year yield up by 9 basis points to 4.86%. The iShares 20+ Year Treasury Bond ETF TLT was 1.5% lower for the day. 

The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.6%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.7% lower to 1.1122.

European equity indexes closed slightly in the green, but the currency-unhedged SPDR DJ Euro STOXX 50 Etf  FEZ fell 0.4%. 

Gold fell 0.4% to $1,967/oz. The SPDR Gold Trust GLD was 0.5% higher to $182. Silver fell 1.4% to $24.80, with the iShares Silver Trust SLV down 1.6% to $22.70. Bitcoin BTC/USD was 0.7% lower to $29,713.

Staff writer Piero Cingari updated this report midday Thursday. 

Read Next: Recession Red Herring? Why This Reliable Job Market Indicator’s Warning Could Be A False Alarm This Time

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