S&P 500 Declines For Second Straight Week as Tesla, Alphabet Weigh

MT Newswires Live07-27

The Standard and Poor's 500 fell for a second consecutive week amid sharp post-earnings sell-offs in Tesla (TSLA) and Alphabet (GOOG, GOOGL) as investors looked ahead to further mega-cap earnings and the Federal Reserve's monetary policy meeting scheduled for next week.

The benchmark equity index ended Friday's session at 5,459.10, down from last week's close of 5,505. Communication services and technology saw the steepest declines for the week among sectors, down 3.8% and 2.4%, respectively, while consumer discretionary fell 2.3%. Energy also saw a decline, while the remaining sectors posted gains, led by utilities' 1.5% increase.

Communication services was dragged lower by a 6% drop in Alphabet. The Google parent's Q2 results topped Wall Street's expectations, though its management flagged caution about decelerating advertisement trends. Charter Communications (CHTR) jumped 15% after reporting better-than-expected results.

Tesla's 8.1% decline following a Q2 earnings miss weighed on the consumer discretionary sector's performance for the week. Ford Motor (F) plunged 20% after posting lower-than-projected Q2 earnings, while Mohawk Industries (MHK) surged 25% after its results topped Street views.

The health care sector rose 1.4% with Molina Healthcare (MOH) jumping 16% following a Q2 beat, while Edwards Lifesciences (EW) slid 28% on a sales miss.

Consumer staples saw a 0.6% gain. Frozen fries maker Lamb Weston (LW) guided for an annual decline in fiscal 2025 earnings, sending its shares down 27% for the week.

Industrials gained 1.1% amid a 22% jump in 3M (MMM) following a Q2 beat, while United Parcel Service (UPS) slipped 11% after its Q2 results fell short of market expectations, and the company tempered its full-year revenue outlook.

Investors are now focused on major companies scheduled to report results next week including Apple (AAPL), Microsoft (MSFT), Meta Platforms (META), and Amazon.com (AMZN). Other big names include Intel (INTC), Boeing (BA), Pfizer (PFE), McDonald's (MCD), AMD (AMD) and Exxon Mobil (XOM).

The tech sector was dragged lower mainly by a 16% plunge in CrowdStrike (CRWD) shares as markets continue to assess the potential impact of last week's global technology outage that stemmed from a company update.

In economic news, the pace of US consumer spending growth eased last month, while the Fed's preferred inflation metric held steady annually. The economy grew at a stronger-than-projected pace in Q2 as consumer spending accelerated while inflation cooled, according to an advance estimate released this week by the Bureau of Economic Analysis.

Markets are widely expecting the central bank's monetary policy committee to hold interest rates steady next week and deliver a 25-basis-point cut in September, according to the CME FedWatch tool.

Fed Chair Jerome Powell is expected on Wednesday to add to signs that the Federal Open Market Committee is close to easing monetary policy, Morgan Stanley said in a note to clients.

Powell said last week that policymakers shouldn't wait for inflation to fall to 2% before reducing interest rates, while Fed Gov. Christopher Waller said the central bank was "getting closer" to cutting rates amid easing inflation.

Next week's economic calendar will feature official jobs data and the Institute for Supply Management's US manufacturing sector report for July.

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