U.S. stocks retreated from record highs as large companies delivered weak earnings reports and disappointing forecasts.
The daylong slide marks a turnaround from Wednesday, when a series of solid earnings helped push major indexes to record highs. This is one of the busiest weeks in the latest round of corporate earnings. The market has been volatile since reports started trickling in last week.
Technology stocks had the steepest declines as the day progressed. Digital payments company PayPal slid 4.3% after cutting its revenue forecast. Microsoft, Intel and Cisco also fell.
A 2.8% drop from Facebook pushed communications stocks lower following the social media company’s latest disclosure that it is being investigated over allegedly anticompetitive behavior.
Invisalign maker Align Technology sank after it gave a disappointing financial forecast because of concerns over demand in China. A disappointing profit report from Ford sent automakers and consumer-oriented stocks lower.
Boeing and American Airlines fell and weighed on the industrial sector. Tesla slumped after reporting a loss in its latest quarter that was much larger than analysts were expecting.
Chipmaker Intel will release its earnings results after the market closes. Investors will be assessing that report to get a better sense of the semiconductor industry’s prospects heading into the second half of the year.
Amazon will also report financial results after the market closes. Consumer products giant Colgate-Palmolive and McDonald’s will release their results on Friday.
KEEPING SCORE: The S&P 500 index fell 0.5% as of 1:50 p.m. Eastern time. The Dow Jones Industrial Average fell 141 points, or 0.5%, to 27,127. The Nasdaq composite fell 0.9%.
EARNINGS SNAPSHOT: More than 36% of S&P 500 companies have reported their latest financial results and investors are still expecting a contraction in overall profit. That would mark the second quarter in a row of lower earnings.
Industrial and technology stocks, which have been contending with the impact of trade disputes and tariffs, will feel some of the most severe profit contractions, according to FactSet.
ANALYST’S TAKE: The market has been swinging up and down over the last two weeks as investors reward and punish corporate earnings, but the overall picture shows solid performances. More than 75% of S&P 500 companies reporting have so far beat somewhat tempered forecasts.
“It’s a pretty low bar to chin and a lot of companies have chinned it,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management.
DENTED FENDER: Ford fell 8.4% after the automaker reported a severe drop in second quarter profit which fell shy of Wall Street’s financial forecasts. The drop was due largely to restructuring costs in Europe and South America. The company is still in the midst of an overhaul that it will cost $11 billion over the next several years.
NEEDS CHARGING: Tesla slumped 14.2 % after the electric car maker reported a surprisingly sharp loss during the second quarter. It also announced the departure of its longtime chief technology officer. The latest loss for Tesla comes despite a quarterly record for vehicle sales.
MISALIGNED: Align Technology plummeted 27.1% after the maker of the Invisalign dental system gave investors a surprisingly weak forecast because of weak demand in China. Shipments for the Invisalign tooth-straightening system were lower than the company expected during the most recent quarter.
MAX WOES: American Airlines fell 5.2% and after the company warned investors of hefty costs because of the grounding of Boeing 737 Max jets.
American Airlines said the long grounding will cut its pretax earnings for 2019 by about $400 million, including $175 million in the second quarter.