A wipeout on Wall Street sent U.S. stock indexes to their worst day since 2022 as Big Tech dragged the market lower following profit reports from Tesla and Alphabet.
The S&P 500 slumped 2.3% Wednesday, its fifth drop in the last six days. The Nasdaq composite skidded 3.
6%, and the Dow Jones Industrial Average fell 1.2%. Tesla tumbled after the electric vehicle maker said its profit for the spring sank 45%.
Alphabet dropped even though it delivered better profit and revenue for the latest quarter than expected. Analysts pointed to some pockets of weakness underneath the surface, including weaker growth in advertising revenue for YouTube than expected. The larger challenge for Alphabet may have simply been how much its stock has already rallied, nearly 50% in the 12 months through Tuesday, on expectations for continual growth.
Critics have been warning that Big Tech stocks have gotten too expensive after soaring most of this year. Profit expectations are high all along Wall Street, but particularly so for the small group of stocks known as the " Magnificent Seven ." Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla need to keep delivering powerful growth after being responsible for the majority of the S&P 500's run to records this year, when many other stocks struggled under the weight of high interest rates.
The hope on Wall Street is that if momentum does flag for the Magnificent Seven, more stocks outside them can rise to support the market. Conditions may.