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U.S. equity futures extended declines Thursday, following on from the worst day for the S&P 500 and the Nasdaq in nearly two years, as investors continue to dump megacap tech stocks and pare risky bets in markets all over the world.
Updated at 7:36 AM EDT
American Turbulence
American Airlines (AAL) shares tumbled in premarket trading after the carrier slashed its 2024 profit forecast amid ongoing ticket pricing pressures.
The group posted mixed second quarter earnings, with a bottom line beat of $1.01 per share on revenues of $14.33 billion, but now sees full-year profits in the region of $0.70 to $1.30 per share, a near $2 decline from its prior forecast.
American Airlines shares were last marked 7.3% lower in premarket trading at $9.43 each, a level that would test the stock’s pandemic low of $9.05 from May 2020.
$AAL destroyed on guidance cut (stock now almost at COVID-2020 lows) / $LUV is overhauling their entire seating system.
All time high TSA numbers and these airlines are getting smoked. Airlines are such tough businesses. Truly feels like an uninvestable space. pic.twitter.com/t9a2bDwPCL
— Investor_NICK (@Investor_NICK_) July 25, 2024
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Stocks ended sharply lower last night, with disappointing earnings from Tesla (TSLA) and Alphabet (GOOGL) triggering big declines in their Magnificent 7 peers and dragging the Nasdaq more than 3.6% lower on the session.
CNBC’s Mag7 index, which tracks the world’s biggest tech companies, fell 6% on the session, with Nvidia (NVDA) down 6.8% and Meta Platforms (META) falling 5.6%.
Related: Analysts reset Google parent stock price targets after Q2 earnings
Selling flowed through into the S&P 500, as well, where megacap tech stocks carry outsized weighting in the broadest benchmark of U.S. stocks, taking the index to its lowest levels since early June.
The so-called ‘risk off’ trading continued in the overnight session, as well, with global oil prices slumping across the board, taking Brent crude contracts back to the $80 per barrel mark.
The so-called Magnificent 7 tech stocks lead broad declines on Wall Street yesterday, pulling the Nasdaq to its lowest levels since early June.
TheStreet
The Japanese yen, whose gains are typically associated with defensive positioning in global markets, rose to a two-and-a-half month high of 152.14 against the U.S. dollar in overnight trading.
Stocks are set to extend their slump, as well, ahead of the Commerce Department’s first estimate of second quarter GDP growth and weekly jobless claims data, both of which are expected at 8:30 am Eastern time.
Related: Former Fed official changes tune on what’s next for interest rates
Futures contracts tied to the S&P 500, which has given back all of its July gains over the past week, are priced for a 13 point opening bell decline while those linked to the Nasdaq suggest an 80 point pullback.
The Dow Jones Industrial Average, meanwhile, is called just 50 points lower as the ongoing rotation from tech stocks to domestic-focused companies continues to benefit the benchmark.
The Great Rotation over the Last 10 Trading Days…
Regional Banks $KRE: +13.8%
Homebuilders $XHB: +10.4%
US Small Caps $IWM: +7.1%
Japanese Yen $FXY: +5.0%
REITs $VNQ: +4.7%
Value $IWD: +1.9%
Gold $GLD: +1.1%
Energy $XLE: +1.1%
—
US Dollar $UUP: -0.4%
US Large Caps $SPY: -3.6%…
— Charlie Bilello (@charliebilello) July 24, 2024
The market’s benchmark volatility gauge, the VIX index, has risen nearly 33% over the past five days and was last marked at $18.94, the highest in more than three months and a level that suggests daily swings of around 64 points for the S&P 500.
Stocks on the move include Ford Motor Co. (F) , which plunged more than 13% lower in premarket trading after the carmaker posted weaker-than-expected second quarter earnings thanks in part to surging warranty expenses.
International Business Machines (IBM) , meanwhile, jumped 4.3% after the tech and cloud group’s second quarter earnings were powered by client spending on AI technologies.
Southwest Airlines (LUV) slumped 3.8% to $25.60 after teh carrier posted stronger-than-expected second quarter earnings and said it would break a 50-year tradition by ending its opening seating model over the coming months.
More Wall Street Analysts:
Analyst revisits Nvidia stock price target after Blackwell checksAnalysts prescribe new Walgreens stock price targets after earningsAnalyst revises Facebook parent stock price target in AI arms race
In overseas markets, Europe’s Stoxx 600 fell 1.46% in Frankfurt, with Britain’s FTSE 100 down 0.83% in London amid the ongoing slump in global stocks.
Overnight in Asia, Japan’s tech-rich Nikkei 225 slumped 3.3%, taking the benchmark into correction territory, as the yen surged and export stocks crumbled.
The region-wide MSCI ex-Japan index, meanwhile, was marked 0.91% into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
