Dow Jones Today: Tech Stocks Drop Send Nasdaq, S&P 500 Down as Investors Shift to Small Caps

S&P’s Main Drivers on Thursday

35 minutes ago

The decliners

• You’re here Tesla shares suffered the biggest losses of any S&P 500 component, falling 8.4% after the automaker said it would postpone the launch of its robotaxi. The company had previously said it would hold an event to showcase the autonomous transportation solution on Aug. 8, but Bloomberg reported that the presentation was pushed back to October. The decline in Tesla shares snapped a run of 11 consecutive sessions of gains.
• Losses deepened for large-cap technology stocks as investors appeared to shift from stocks that have soared in 2024 to laggards that could be positioned for gains amid greater certainty about lower rates. Semiconductor stocks in particular came under pressure. Shares of chipmaking equipment suppliers Lam Search (LRCX) and Applied materials (AMAT) shares fell 6% and 5.4% respectively. The semiconductor giant Nvidia (NVDA) fell 5.6%.
• Airline stocks lost altitude after Delta Airlines (DAL) reported lower-than-expected earnings, citing higher fuel costs and other expenses. Delta shares fell 4% on the day, while shares of rival carriers also declined.

Advancers

• Actions of SBA Communications (SBAC), which owns and operates cell towers and other wireless communications infrastructure, was the top performer in the S&P 500 on Thursday, jumping 7.5%. The gains came after the company announced a shakeup in its executive leadership, adding Saul Kredi as vice chairman and chief accounting officer. Kredi’s past experience includes leadership roles in the infrastructure and management consulting industries.
• Lower consumer inflation helped lift shares across the housing sector as expectations for firmer rate cuts added to optimism that mortgage rates could fall. Shares of building products distributor FirstSource Builders (BLDR) jumped 7.4%, as did shares of the flooring maker Mohawk Industries (MHK).
• In addition to suppliers to the construction sector, housebuilders also benefited from the expected fall in borrowing costs. Dr. Horton Shares (DHI) rose 7.3%, while Lennar Shares (LEN) gained 6.9%.

-Michael Bromberg

Homebuilder shares rise on rate cut hopes

1 hour 51 minutes ago

Homebuilder shares jumped Thursday on hopes that mortgage rates will begin to fall significantly this year.

A weaker-than-expected June inflation report boosted investors’ hopes that the Federal Reserve will cut rates as early as September.

If the Fed does indeed cut interest rates, homebuyers who have chosen to stay on the sidelines may be more likely to enter the housing market, boosting investor confidence in the outlook for homebuilders.

The Fed has held its benchmark interest rate at a 23-year low for nearly 12 months in an effort to control inflation by making borrowing more expensive.

Homebuilders have been doubly penalized, as they not only face higher borrowing costs but also weaker demand. Potential buyers have stayed away from the market as rising mortgage rates and home prices make buying a home less affordable.

Shares of DR Horton (DHI), Toll Brothers (TOL), PulteGroup (PHM), Lennar (LEN) and KB Home (KBH) all jumped on Thursday.

-Trina Paul

Tesla Collapses After Robotaxi Event Postponed

3 hours 19 minutes ago

Tesla (TSLA) shares fell Thursday after a report that the unveiling of the electric vehicle maker’s highly anticipated self-driving robotaxi has been delayed by two months.

Bloomberg Tesla’s planned event on August 8 has been postponed until October to give teams working on the project more time to build additional prototypes. The news agency reported that people familiar with the decision said the delay had been communicated to workers internally.

Tesla CEO Elon Musk announced the August launch date on social media in April and touted the self-driving robotaxi as a technology that would make other vehicles obsolete.

Tesla shares began an 11-session rally Thursday, gaining 44%, fueled by a better-than-expected second-quarter delivery report. The stock was down more than 7% in late trading Thursday.

–Bill McColl

Russell 2000 Index Soars as Investors Shift to Small Caps

3 hours 51 minutes ago

As Nvidia (NVDA), Microsoft (MSFT), Apple (AAPL) and other large-cap tech stocks fell Thursday, investors turned to small-cap stocks in hopes they could get a boost from the Federal Reserve’s rate cuts.

The Russell 2000 index rose more than 3% after the Labor Department’s latest inflation report showed consumer prices unexpectedly fell in June, raising hopes the Fed will have the confidence to cut interest rates this year.

Fed rate cuts would lower borrowing costs for borrowers, and small-cap stocks could potentially benefit more from Fed rate cuts because many small- and mid-cap companies have more floating debt than their larger counterparts.

Bank of America analysts also suggested earlier this week that second-quarter earnings could show growth is finally starting to broaden beyond the biggest tech stocks, which have led the index’s earnings gains and returns so far this year.

–Kara Greenberg

Microstrategy rises after stock split announcement

6 hours 40 minutes ago

MicroStrategy (MSTR), one of the world’s largest holders of bitcoin (BTC), announced Thursday that it is planning a 10-for-1 stock split, making it the latest company to announce a split.

Shares of MicroStrategy were up more than 3% in late morning trading Thursday, bucking a broader stock market slowdown.

MicroStrategy’s Class A and Class B shares will be split for shareholders of record as of August 1. Investors will receive nine additional shares after the close of trading on August 7 for each share they previously held. MicroStrategy’s first split-adjusted trading day will be August 8.

While the split will not change the overall value of investors’ MicroStrategy holdings, by lowering the price of each MicroStrategy share, the split could help make the stock more accessible to investors and stimulate demand.

The company’s shares have more than doubled in value this year after the U.S. Securities and Exchange Commission’s approval of spot Bitcoin ETFs in January sent prices of the token soaring.

However, the excitement surrounding bitcoin, which surged above $73,000 in March, has faded somewhat recently. The token is currently trading in a tight range below $60,000.

–Nisha Gopalan

Delta Falls on Weak Profits, Other Airlines Hit

8 hours 3 minutes ago

Shares of Delta Air Lines fell sharply in early trading Thursday after the airline reported second-quarter profit that missed estimates and lowered its third-quarter forecast.

Total revenue rose 7% from last year’s second quarter to a record $16.7 billion, better than the $16.2 billion analysts had expected, according to estimates compiled by Visible Alpha. However, Delta’s earnings per share of $2.01 fell 29% from a year earlier, well below the $2.39 expected.

Debt reduction remains Delta’s “top financial priority” heading into the second half of the year, after spending $1.4 billion to pay down debt in the second quarter. Delta reaffirmed its full-year adjusted earnings per share (EPS) forecast of $6 to $7, but forecast adjusted profit of $1.70 to $2.00 in the third quarter, which fell short of expectations.

Shares of rival airlines United (UAL), American (AAL) and Southwest (LUV) also fell in early trading Thursday.

–Aaron McDade

Stock futures down ahead of CPI inflation report

10 hours 29 minutes ago

Futures contracts tied to the Dow Jones Industrial Average were down 0.2% about a half-hour before the release of closely watched inflation data.

S&P 500 futures fell 0.1%.

Nasdaq 100 futures were also down 0.1%.