A tough week for tech on the stock market

The tech earnings season started with disappointments for investors as shares of the Magnificent Seven companies all declined during the trading week.

Alphabet Inc. reported stronger-than-expected earnings and revenue but missed analysts' targets on YouTube advertising revenue, leading to the worst week of the year for the Google parent company’s stock.

Tesla missed quarterly earnings forecasts due to thinner profit margins impacted by lower vehicle prices and restructuring charges. The electric-vehicle giant also postponed the announcement of the Robotaxi to October. Shares fell 12.3% in reaction to the earnings report on Wednesday, marking the worst one-day performance since September 2020.

The tech-heavy Nasdaq 100 index notched the second-straight week in the red for the first time since April.

Among mega-cap stocks, Ford Motor Co. and United Parcel Service Inc. experienced the largest declines this week, followed by General Motors, amid disappointing earnings reports. The top performers among mega caps were 3M Company and Bristol-Myers Squibb Company, buoyed by surprising results.

Small-cap stocks outperformed once again this week, with the Russell 2000 index marking its third straight week of gains, supported by high expectations for upcoming interest rate cuts.

On the macroeconomic front, the U.S. economy grew at an annualized pace of 2.8% in the second quarter, accelerating from the first quarter and topping expectations of 2% growth.

Inflation gauge falls

An inflation measure followed by the Federal Reserve fell to 2.5% in June, hitting the lowest levels since February 2021 and cementing market expectations of a rate cut in September.

Yet the Fed is seeking a more "durable downward trend" before deciding to cut rates, according to a Comerica Bank economist.

Alphabet shares drop

OpenAI plans to launch SearchGPT, a tool aimed at challenging Google's search dominance, opening a 10,000-person waiting list to test the new product.

Mortgage rates ease

Mortgage rates have declined to the lowest levels since February, with the average 30-year fixed interest rate falling to 6.62%, driven by investor anticipation of future interest rate cuts. Despite this, demand among homebuyers remains weak.

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