US stock markets faced their biggest sell-off in nearly 18 months on Wednesday, due mainly to disappointing earnings reports from major corporations Tesla and Alphabet, the parent company of Google.
The tech-heavy Nasdaq index fell 3.6% to 17,342.41 points. The Dow Jones wrapped up 1.3% lower at 39,853.87, while the S&P 500 shrank by 2.3% to 5427.13 points.
Tesla’s value plunged 12.3%. The electric car manufacturer’s profits for the second quarter dipped considerably due to price cuts and hefty investments in artificial intelligence (AI). This was the fourth consecutive quarter of poorer-than-expected results for Tesla.
CEO Elon Musk asked his followers on X whether Tesla should invest $5 billion in his AI company, xAI.
Alphabet witnessed a drop of 5% after its announcement on Tuesday about a profit increase due to its cloud services. Higher earnings were also due to improved advert revenue despite lagging YouTube ad sales.
Cybersecurity firm CrowdStrike’s value fell 4% further. Following an automated update last Friday, Windows devices worldwide failed to operate, affecting banks, airports, hospitals, and government agencies. According to an announcement on Wednesday, the incident was caused by a bug in the quality control system.
BMW declined by 0.7%. The car manufacturer is recalling over 290,000 vehicles in the US. In some cars, certain rails may become dislodged in a rear collision, increasing injury risk.
At the close of trading in New York, the euro stood at $1.0839, down slightly from $1.0860 earlier. A barrel of US oil went up by 0.6% to $77.45. Brent crude also rose by 0.6%, costing $81.47 per barrel.
