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Daily Stock Market Update — Thursday, July 26

Stock Market Update Wall Street Wake-Up Call

Stocks retreated from record highs set a day earlier as large companies delivered weak earnings reports and disappointing forecasts and more in Thursday’s Stock Market Update.

The daylong slide marks a turnaround from Wednesday, when a series of solid earnings helped push major indexes to record highs. This is one of the busiest weeks in the latest round of corporate earnings. The market has been volatile since reports started trickling in last week.

Technology stocks sustained the steepest declines throughout the day. Digital payments company PayPal slid 5.1% after cutting its revenue forecast. Microsoft and Apple also fell. A disappointing profit report from Ford sent automakers and consumer-oriented stocks lower.

A 1.9% drop from Facebook pushed communications stocks lower following the social media company’s latest disclosure that it is being investigated over allegedly anticompetitive behavior.

Boeing and American Airlines fell and weighed on the industrial sector. Banks led the financial sector lower. Tesla slumped after reporting a loss in its latest quarter that was much larger than analysts were expecting.

STOCK MARKET UPDATE

KEEPING SCORE: The S&P 500 index fell 15 points, or 0.5% to 3,003. The Dow Jones Industrial Average lost 128 points, or 0.5%, to 27,141. The Nasdaq fell 82 points, or 1%, to 8,238.

EARNINGS SNAPSHOT: More than 36% of S&P 500 companies have reported their latest financial results and investors are still expecting a contraction in overall profit. That would mark the second quarter in a row of lower earnings.

Industrial and technology stocks, which have been contending with the impact of trade disputes and tariffs, will feel some of the most severe profit contractions, according to FactSet.

ANALYST’S TAKE: The market has been swinging up and down over the last two weeks as investors reward and punish corporate earnings, but the overall picture shows solid performances. More than 75% of S&P 500 companies reporting have so far beat somewhat tempered forecasts.

“It’s a pretty low bar to chin and a lot of companies have chinned it,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management.

DENTED FENDER: Ford fell 7.4% after the automaker reported a severe drop in second quarter profit which fell shy of Wall Street’s financial forecasts. The drop was due largely to restructuring costs in Europe and South America. The company is still in the midst of an overhaul that it will cost $11 billion over the next several years.

NEEDS CHARGING: Tesla slumped 13.6 % after the electric car maker reported a surprisingly sharp loss during the second quarter. It also announced the departure of its longtime chief technology officer. The latest loss for Tesla comes despite a quarterly record for vehicle sales.

MISALIGNED: Align Technology plummeted 27% after the maker of the Invisalign dental system gave investors a surprisingly weak forecast because of weak demand in China. Shipments for the Invisalign tooth-straightening system were lower than the company expected during the most recent quarter.

MAX WOES: American Airlines fell 8.4% and after the company warned investors of hefty costs because of the grounding of Boeing 737 Max jets.

American Airlines said the long grounding will cut its pretax earnings for 2019 by about $400 million, including $175 million in the second quarter.

OVERSEAS: Germany’s DAX fell 1.3% after a survey showed that business confidence Europe’s largest economy dropped to a six-year low. France’s CAC 40 and Britain’s FTSE 100 also fell.

BONDS AND CURRENCIES: Bond prices fell. The yield on the 10-year Treasury rose to 2.07% after the government reported that orders to U.S. factories for large manufactured goods rose last month beyond economists’ forecasts.

© The Associated Press. All rights reserved.

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