The S&P was flat near midday, but the averages took a decided turn lower in afternoon trading to finish with declines across the board as an unexpected rise in weekly jobless claims stoked concerns the U.S. economic recovery has stalled as many states face a spike in COVID-19 cases. Microsoft and Tesla each beat quarterly earnings and revenue expectations, but neither stock rose following their reports and other big names in tech also slid as the Nasdaq was the leader to the downside among the key indexes.
ECONOMIC EVENTS: In the U.S., initial jobless claims rose 109,000 to 1.42M in the week ended July 18, missing expectations for a sixteenth straight weekly decline. The Conference Board's Leading Economic Index increased 2.0% to 102.0 in June.
The latest data from the Johns Hopkins Whiting School of Engineering shows there are now 15.3M confirmed cases of COVID-19 worldwide, including nearly 4M in the U.S., and 624,370 deaths due to the disease. At the state level for some U.S. hot spots, Florida reported 389,868 COVID-19 cases, up about 10,000 cases from yesterday, while Arizona reports 152,944 COVID-19 cases, up 2,335 from the prior day. Meanwhile, California reported 425,616 COVID-19 cases, up 12,040 from the previous day.
In other news, Hu Xijin, editor-in-chief of the Chinese and English editions of the Global Times, reported that China will announce countermeasures agains the U.S. on Friday. "One US consulate in China will be asked to close," Hu Xijn said. "China is forced to take this reciprocal measure. If not, it would cause serious consequences."
TOP NEWS: Shares of Tesla (TSLA) were almost 5% lower following last night's Q2 results. While several analysts have noted that the company benefited from a high amount of credit-related revenue in the quarter, Piper Sandler analyst Alexander Potter said it is "undeniably impressive" that the company may still exceed 500,000 deliveries in 2020. Meanwhile, Cowen analyst Jeffrey Osborne upgraded Tesla to Market Perform from Underperform, saying he "fully admits" to having been wrong on Tesla the last few years, and Morgan Stanley analyst Adam Jonas said "bears really would have to nit pick at the release to construct a materially negative narrative" to tell about the report.
Microsoft (MSFT) shares slipped 4.3% despite better than forecast earnings and revenue, with analysts pointing to margin weakness and a slowdown in cloud growth as reasons for a pullback following the report. Oppenheimer analyst Timothy Horan, who estimates total cloud revenue growth slowed to 22% from 32%, downgraded Microsoft shares to Perform from Outperform following the company's June quarter results, while Credit Suisse analyst Brad Zelnick was among those on Wall Street who said he would be a buyer on weakness.
Twitter (TWTR) shares were over 4% higher despite a revenue miss as the company reported better than expected 34% year-over-year growth in monetizable daily active users, or mDAU, to 186 million in the second quarter. Of note, CEO Jack Dorsey said on the company's quarterly call that the company is exploring options to make more money from users, including a potential subscription service.
In other large-cap earnings news, American Airlines (AAL) was higher following its quarterly report, while Dow (DOW), AT&T (T), Chipotle Mexican Grill (CMG) and Travelers (TRV) were all lower.
Meanwhile, Axios reported that the Texas attorney general is involved in a multi-state investigation into whether Apple (AAPL) violated deceptive trade practices laws, although it is not clear what specific practices Texas or any other states are looking into or the current status of the investigation.
MAJOR MOVERS: Among the noteworthy gainers was Whirlpool (WHR), which rose 8% after it reported better than expected Q2 results and revised its fiscal 2020 sales guidance. Also higher after reporting quarterly results were Brightcove (BCOV) and Helix Energy (HLX).
Among the notable losers following earnings were Citrix Systems (CTXS), which declined 12.9%, Align Technology (ALGN), which fell 5.9%, and Las Vegas Sands (LVS), which dropped 4.2%.
INDEXES: The Dow fell 353.51, or 1.31%, to 26,652.33, the Nasdaq lost 244.71, or 2.29%, to 10,461.42, and the S&P 500 declined 40.36, or 1.23%, to 3,235.66.
Align Technology
-18.37 (-5.78%)
Tesla
-76.365 (-4.80%)
Microsoft
-9.16 (-4.33%)
+1.5 (+4.06%)
American Airlines
+0.41 (+3.61%)
Dow Inc.
-1.5 (-3.39%)
AT&T
-0.31 (-1.03%)
Chipotle
-62.61 (-5.29%)
Las Vegas Sands
-1.97 (-4.21%)
Apple
-17.78 (-4.57%)
Whirlpool
+11.41 (+7.75%)
Brightcove
+3.56 (+44.00%)
Helix Energy
+1.02 (+26.74%)
Citrix
-21.81 (-13.04%)
Travelers
-3.83 (-3.13%)