Tech Giants' Earnings Shake Market Confidence

The S&P 500 and Nasdaq fell to multi-week lows as disappointing earnings from Tesla and Alphabet raised concerns about the sustainability of the tech-driven equity rally. Tesla reported its lowest profit margin in five years, while Alphabet's advertising growth slowdown and high capital expenses worried investors.

The S&P 500 and Nasdaq plunged to multi-week lows on Wednesday, driven by disappointing earnings reports from Tesla and Alphabet, sparking doubts about the long-term viability of the tech-driven market rally.

Tesla's shares dropped 11.2%, poised to lose over $80 billion in market value after reporting its lowest profit margin in five years and missing second-quarter earnings estimates. Alphabet, despite beating earnings expectations, saw its shares fall 4.9% due to concerns over lagging advertising growth and high capital expenses.

The declines in Tesla and Alphabet dragged down the S&P 500 Communication Services and Consumer Discretionary sectors by more than 3.2% each, with Information Technology being the weakest sector. Many analysts caution that the entire market may be affected if the tech sector experiences further declines.