Wall Street Mixed: Alphabet Surges, Tesla Drags Markets/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ The S&P 500 inched higher Thursday as Alphabet’s strong earnings lifted tech stocks, while Tesla’s sharp drop kept broader gains in check. Tesla fell nearly 8% after disappointing investors despite hitting earnings targets, citing political fallout and future headwinds. Major U.S. indexes remained near record highs, bolstered by positive job and economic data and hopes for easing tariffs.
Market Moves Quick Looks
- S&P 500 up 0.2%, Dow Jones down 204 points
- Alphabet jumped 1.6% after beating profit estimates
- Tesla fell 7.9% despite meeting Q2 expectations
- Nvidia rose 0.8%, boosting tech sentiment
- IBM dropped 10.4% on software growth concerns
- Chipotle stock fell 12% despite strong profits
- American Airlines down 7.9% on weak summer outlook
- Meme stock Opendoor gained 10.9% amid high volatility
- Treasury yields steady; 10-year note at 4.40%
- Strong economic data fuels confidence in Fed holding rates steady
Deep Look: Alphabet Lifts Wall Street as Tesla Stumbles
NEW YORK — Wall Street stayed near all-time highs Thursday despite notable divergences among major stocks, as Alphabet’s stronger-than-expected earnings buoyed the market, while Tesla’s significant drop held back further gains.
The S&P 500 ticked up 0.2%, extending its recent record-setting run. The Nasdaq composite also rose 0.2%, powered by gains in the tech sector. Meanwhile, the Dow Jones Industrial Average slipped 204 points, dragged down by earnings disappointments.
Alphabet Drives Optimism with AI-Focused Growth
Alphabet, parent company of Google and YouTube, led market gainers after posting robust quarterly earnings. The tech giant’s shares climbed 1.6%, fueled by a positive earnings surprise and renewed investor enthusiasm about its artificial intelligence (AI) investments.
The company announced a $10 billion increase to its AI infrastructure budget, bringing total planned AI spending to $85 billion for the year. This news also boosted other AI-related stocks, with Nvidia rising 0.8%, reinforcing the narrative of AI as a key growth engine in the current market cycle.
Tesla Drops Despite Meeting Expectations
In stark contrast, Tesla shares sank 7.9%, even though the electric vehicle maker reported quarterly results that met or slightly exceeded Wall Street forecasts. Investors remained cautious due to CEO Elon Musk’s political entanglements and warnings of a “weird transition period” ahead.
Musk suggested that the company might lose U.S. incentives in coming quarters and hinted at continued volatility as Tesla shifts focus toward AI and robotaxis. Despite trying to spotlight innovation, investor confidence appears to be wavering amid Musk’s increasing political visibility.
Other Corporate Earnings Stir the Pot
- Chipotle Mexican Grill fell 12% after its revenue growth disappointed despite strong profits.
- IBM stock dropped 10.4%, with analysts highlighting slowing growth in its software division.
- American Airlines declined 7.9%, warning of a possible summer loss and offering a broad full-year guidance range from a loss of 20 cents to a gain of 80 cents per share.
Market reactions to earnings this season have been sharper than usual, especially when companies miss or exceed profit forecasts significantly. That volatility reflects heightened expectations amid elevated stock valuations.
Meme Stocks and Volatility Below the Surface
Volatility remains intense under the surface of calm index performance. Opendoor Technologies surged 10.9%, continuing its rollercoaster ride with double-digit swings for 10 consecutive days. These “meme stock” moves are attracting speculative traders, though they’ve had limited impact on broader market indexes.
Interestingly, the S&P 500 has not posted a 1% swing in either direction for a full month, signaling relative calm at the index level.
Economic Data Supports Stability
Markets also digested encouraging U.S. economic data:
- Jobless claims dropped, suggesting slowing layoffs.
- S&P Global’s report showed a surprising acceleration in U.S. business activity in July.
These indicators helped reinforce market expectations that the Federal Reserve will hold interest rates steady at next week’s meeting, despite pressure from President Donald Trump, who continues to advocate for rate cuts.
The 10-year Treasury yield briefly touched 4.44% before retreating to 4.40%, reflecting market consensus around economic resilience and steady central bank policy.
Global Markets Echo U.S. Sentiment
Abroad, global equity markets mirrored U.S. strength:
- Japan’s Nikkei 225 rose 1.6%, buoyed by export growth
- London’s FTSE 100 climbed 1%, helped by mining and energy gains
Looking Ahead
While Wall Street indexes remain at or near record highs, investors face a growing disconnect between performance at the surface and turbulence underneath. Sharp movements in major tech names and consumer companies highlight the high stakes of earnings season in a market priced for perfection.
With continued focus on AI innovation, political uncertainty, and tariff negotiations, investors will be watching for signs of whether recent gains are sustainable or if correction risks begin to rise.
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