U.S. stocks tumbled on Thursday, reversing early gains as investors continued to rotate away from high-priced megacap growth stocks and second-quarter earnings season gathered steam.
Market Snapshot
The S&P 500 fell 0.78% to end the session at 5,544.59 points. The Nasdaq fell 0.70% at 17,871.22 points, while Dow Jones Industrial Average fell 1.29% to 40,665.02 points.
Market Movers
Taiwan Semiconductor Manufacturing reported second-quarter earnings that beat analysts’ estimates and the world’s largest contract chip maker boosted its revenue projections for the full year. The company said second-quarter revenue from its high-performance computing segment, which includes artificial-intelligence chips, rose 28% from the previous quarter. U.S.-listed shares of the company were up 0.3%.
The revenue outlook hike from TSMC was giving a lift to Nvidia, which rose 2.8% after the maker of chips that are the favored choice for training artificial-intelligence systems fell 6.6% on Wednesday.
Nokia’s U.S.-listed stock declined 6.9% after the Finnish telecommunications company reduced sales expectations for the year after net sales in the second quarter declined 18%.
Chuy’s Holdings jumped 48% to after Darden Restaurants agreed to acquire the Tex-Mex restaurant chain for about $605 million. Darden declined 3%.
Beyond Meat dropped 10% after The Wall Street Journal reported the plant-based meat maker was engaged in discussions with a group of bondholders about restructuring its balance sheet.
Netflix added more than 8 million subscribers in its second quarter as the streaming service benefited from a password-sharing crackdown and the popularity of such titles as "Bridgerton," "Baby Reindeer" and "The Roast of Tom Brady." While the subscriber gains topped analyst predictions of 5 million, Netflix issued cautious guidance for the third quarter and said its advertising business would not become a primary driver of revenue growth until at least 2026. Netflix shares reversed initial losses in after-hours trading after it reported results.
Domino’s Pizza dropped 13% after the pizza chain posted second-quarter earnings that beat estimates but revenue, up 7.1% from a year earlier, slightly missed forecasts.
Warner Bros. Discovery rose 2.4% after the Financial Times reported the company was considering a number of strategic options, including splitting off its digital streaming and studio businesses from its television networks.
D.R. Horton, the nation’s largest home builder, jumped 10%. The company beat quarterly earnings expectations and said it would launch a new stock buyback of $4 billion. Homes closed rose to 24,155 from 22,985 a year earlier.
Eli Lilly was down 6.2%, extending losses from Wednesday that saw the stock fall 3.8% after Swiss drugmaker Roche disclosed promising trial data for its weight-loss medicine.
United Airlines posted second-quarter adjusted earnings of $4.14 a share, beating analysts’ estimates of $3.94. Shares of the carrier were down 1.2%. United issued third-quarter earnings guidance that fell short of expectations. United said it has been managing the business in the face of industrywide challenges, specifically a drop in the industry’s domestic capacity growth rate, which it anticipated.
Market News
OpenAI Holds Talks with Broadcom About Developing New AI Chip
ChatGPT maker OpenAI is in discussion with chip designers, including Broadcom , about developing a new artificial intelligence chip, the Information reported on Thursday, citing people familiar with the matter.
OpenAI is exploring the idea of making AI chips on its own to overcome the shortage of expensive graphic processing units that it relies on to develop AI models such as ChatGPT, GPT-4, and DALL-E3.
Tesla's California car registrations fall for third straight quarter
Registrations of Tesla cars in California fell 24% in the April to June period, marking the third consecutive quarter that the company posted a sales drop in its key market, indicating mounting challenges for the EV maker, according to industry data on Thursday.
High interest rates and stiff competition have softened demand for electric vehicles as consumers opt for less-expensive hybrid cars.
Meta in Talks to Buy Stake in Eyewear Giant EssilorLuxottica
Meta Platforms Inc. is in talks to take a minority stake in the maker of Ray-Ban sunglasses as the Facebook owner intensifies its push into smart glasses.
Meta, which has collaborated with EssilorLuxottica SA on Ray Ban-Meta smart eyewear, is considering a stake of more than 3% and as much as 5% in the luxury eyewear group, which would be valued at about €4.5 billion ($4.9 billion) at current prices, according to people familiar with the discussions, who asked not to be identified because the information is not public.