Tesla and Alphabet drag the market to its worst results in two years

Disappointing results from Tesla and Alphabet sent technology stocks plummeting on the New York Stock Exchange on Wednesday driven by investor fears of a slowdown in the sector.

The Nasdaq index, which groups most of the big tech companies, slumped down 3.64%, while the Dow Jones lost 1.25% and the broader S&P 500 index, 2.31%.

The Nasdaq experienced its worst trading session since September 2022.

Tesla (-12.33%) posted a profit well below expectations, cut by restructuring costs linked to a wave of layoffs, but also affected by the price war waged by electric vehicle makers.

CFRA's Garrett Nelson downgraded his recommendation on the stock, deeming the group lacks near-term catalysts.

Tesla was dragged down by Rivian (-7.03%), Lucid (-5.61%) and New York-listed Chinese manufacturer Zeekr (-7.73%).

As for Alphabet (-5.03%), it outperformed expectations across the board, with the exception of video platform YouTube, whose ad sales fell short of target.

Sector slump

The surge sent almost the entire semiconductor sector down, from Nvidia (-6.80%) to Broadcom (-7.59%) to Qualcomm (-6.35%) to AMD (-6.08%) to Intel (-3.79%).

The other giants of the new economy, Amazon (-2.99%), Microsoft (-3.59%), Apple (-2.88%) and Meta (-5.61%), which were also not spared on Wednesday, will not publish their accounts until next week.

The VIX index, which measures traders' nervousness, soared 22%, a sign of a deepening anxiety in New York.

Generalized fall

In addition to the technology sector, the so-called cyclical stocks, that is, those considered sensitive to the economy, were also punished: construction machinery specialist Caterpillar fell by 2.36%, DIY chain Home Depot by 2.59% and sports equipment manufacturer Nike by 3.15%.

Another cause for concern was Visa (-4.01%), which failed to meet analysts' sales forecasts.

Very few assets found favor with the market on Wednesday, which also sold Treasuries, despite considering them one of the safest investments.

The yield on 10-year U.S. government bonds stood at 4.28%, down from 4.25% at the previous day's close. Bond prices are moving in the opposite direction to their yields.

Among the few sectors that escaped the earthquake was energy, driven by the rebound in oil prices, with ExxonMobil (+1.41%) and Chevron (+0.64%) in particular.