Five of magnificent seven positive; Tesla down more than 1%, Nvidia drops 0.5%

Five of magnificent seven positive; Tesla down more than 1%, Nvidia drops 0.5%

U.S. stock futures displayed mixed activity on Thursday, with the tech sector underperforming following Nvidia’s earnings report and Tesla’s European sales decline. The Magnificent Seven, a group of leading tech stocks, saw five of its members gain, while Tesla and Nvidia experienced notable drops.

Nvidia (NASDAQ:NVDA), the AI chipmaker, reported strong quarterly results after the market close on Wednesday, exceeding analysts’ estimates. The company’s earnings of $1.04 per share and revenue of $46.7 billion beat expectations. However, data center revenue fell short of estimates due to no H20 chip sales in China during the quarter. This uncertainty, along with questions about China’s regulatory environment, caused investors to question Nvidia’s high valuation, leading to a significant after-hours sell-off. The stock’s value dropped by around $110 billion, reducing its market capitalization from $4.4 trillion to $4.3 trillion [1].

Tesla (NASDAQ:TSLA) faced a significant setback in Europe, with sales in July falling by more than 40% year-on-year. The company lagged behind Chinese rival BYD, which captured a larger market share in the region. Tesla’s total new car registrations in the European Union, Europe Free Trade Association, and the United Kingdom dropped by over 40% year-on-year. This decline came despite an overall increase in electric vehicle sales in Europe, which surged 33.6% in July. Tesla’s market share in Europe shrank to 0.8% from 1.4% year-on-year, and January-July sales declined by 33.6%. The company’s updated Model Y and the intensifying competition from European automakers failed to boost sales. Additionally, CEO Elon Musk’s endorsements and associations with controversial political figures have negatively impacted Tesla’s brand image in Europe [2].

Uncertainty over the U.S.-Japan trade deal also weighed on markets. Japan’s top trade negotiator, Ryosei Akazawa, canceled a planned visit to Washington, delaying talks over a $550 billion investment package tied to tariff reductions. The cancellation was due to administrative discussions that needed to be resolved before the visit. The agreement, reached in July, set a 15% tariff on Japanese imports in exchange for U.S.-bound investments backed by loans and guarantees [3].

Overall, the market reacted to these developments with mixed sentiment. While the S&P 500 and the Dow Jones Industrial Average posted gains, the tech-heavy Nasdaq underperformed, reflecting the impact of Nvidia’s earnings and Tesla’s European sales decline. Investors are also closely monitoring results from other tech companies like Snowflake and NetApp, as well as economic data releases such as weekly jobless claims and Q2 GDP growth.

References:
[1] https://www.investing.com/news/economy/nvidias-results-teslas-european-sales-japan-trade--whats-moving-markets-4213918
[2] https://finance.yahoo.com/m/bc0e5c8b-0d55-3427-9999-8207fbeb2e01/stocks-to-watch-recap-tesla-.html
[3] https://investorshub.advfn.com/market-news/article/15370/dow-jones-sp-nasdaq-wall-street-futures-markets-react-to-nvidia-earnings-tesla-sales-decline-and-japan-trade-news