The Nasdaq Composite suffered its biggest one-day drop in more than four months yesterday as investor disappointment with results from Netflix and Tesla called into question the strong, months-long rally in the tech sector.
The tech-heavy index dropped 2.1 per cent, its biggest daily decline since March 9. The broader S&P 500 index fell 0.7 per cent.
Tesla shares tumbled 9.7 per cent, its biggest single-day drop since early January, after the electric-car maker said its profit margins slipped as a series of price cuts aimed at boosting sales weighed on earnings.
Netflix fell 8.4 per cent, having missed sales estimates and posting lower than expected guidance for the third quarter. It was the stock’s biggest one-day drop since December 2022.
Even after yesterday’s sell-off, the Nasdaq Composite index is still up more than 35 per cent this year following a wave of investment into artificial intelligence-related companies.
The presumption that interest rates in the US are nearing their peak has also helped drive up equity prices this year.
The US central bank will announce the outcome of its latest rate-setting meeting on Wednesday next week and it is widely expected to increase its main policy rate by a quarter of a percentage point but that is predicted by many economists to be the final rise in the current tightening cycle.
Futures contracts tracking the Nasdaq 100 point to the index opening 0.3 per cent higher later today, while those tracking the benchmark S&P 500 rose 0.2 per cent ahead of the New York open.
Here’s what else I’m keeping tabs on today and over the weekend:
Results: Credit card group American Express and SLB, formerly Schlumberger, the oilfield services group, report second-quarter earnings today.
Women’s football World Cup: The US team begins the defence of its title against Vietnam in Auckland at 9pm ET.
Spanish elections: The Vox party is expected to notch wins on Sunday, potentially bringing the hard right into central government for the first time since Spain’s return to democracy.
Five more top stories
1. The Federal Reserve yesterday launched a new real-time payments system, called FedNow, to speed up the antiquated money transfer system in the US. It is the first new government-backed US payments system or “rail” since the start of the Automated Clearing House network in the 1970s. Read more on the changes.
2. FTX, the bankrupt cryptocurrency exchange, has sued its founder Sam Bankman-Fried and three other former executives to claw back more than $1bn they allegedly misappropriated in the months leading up to its collapse last year. Read more on the lawsuit filed yesterday in a Delaware bankruptcy court.
3. US cinema owners are looking to cash in on the meme-driven “Barbenheimer” phenomenon, which has led hundreds of thousands of film-goers to buy tickets to see Barbie on the same day as Oppenheimer this weekend. Read more on the rush to buy tickets for two wildly different films.
4. Exclusive: The Asian Infrastructure Investment Bank has secured a $1bn deal with the World Bank to issue credit guarantees against sovereign-backed loans made by the latter’s lending arm. The agreement is one of the Beijing-backed group’s highest-profile partnerships and comes just weeks after it was accused of being infiltrated by China’s Communist party. Read the full story.
China Focus: Check out the Financial Times’s hub that brings together our best work on Asia’s biggest economy.
5. A shortage of Nvidia’s latest chips has provided start-ups with an opening to challenge the dominance of the world’s most valuable semiconductor company. Surging demand for the specialist chips that power artificial intelligence is expected to outstrip supplies well into next year. Here are the fledgling companies hoping to get a slice of the pie.
How well did you keep up with the news this week? Take our quiz.
News in-depth
Nearly a year and a half into President Vladimir Putin’s war on Ukraine, fewer than 300 of the more than 3,350 large foreign companies with assets in Russia have managed to leave. The situation for those that remain has taken a turn for the worse, with a dearth of buyers and hardening Kremlin attitudes. “This is like Venezuela,” said a senior Moscow businessman. “They’re giving the best to their cronies.”
We’re also reading and watching . . .
Gillian Tett: New research highlights two issues that have hitherto been largely ignored following the collapse of Silicon Valley Bank in the spring.
ATM attacks: Germany’s love of banknotes and a fragmented police force have made the country Europe’s centre for Dutch gangs using bombs to raid cash machines.
‘Lure of the forbidden’: After a US army private made a sudden dash across the border into North Korea, focus is now turning to how he was able to do it and why.
Chart of the day
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Would humanity settle on a new planet where going outdoors during daylight hours would be potentially lethal, asks the FT’s chief data reporter John Burn-Murdoch. Back on Earth, he points out that Phoenix, Arizona, where maximum temperatures have now exceeded 40C for 26 successive days, is America’s fastest-growing big city. He tries to explain this irrational behaviour in his latest column.
Take a break from the news
The Adirondacks region of New York state is known for its lakes and mountain retreats. The FT’s property section has listed five properties currently for sale.
Additional contributions by Tee Zhuo and Benjamin Wilhelm
Source: Economy - ft.com
