US stocks rise after tech-led selloff / Photo: © AFP/File
US stocks rise after tech-led selloff
Wall Street stocks rose Thursday as robust US economic growth boosted sentiment following a tech-led selloff, but European markets wavered following a raft of disappointing company results.
A slump began earlier this week following disappointing earnings reports from US electric car giant Tesla and Google owner Alphabet, two of the "Magnificent Seven" stocks that have fuelled a global rally this year.
Stock markets fell further as a slew of companies in a range of industries -- from automakers to luxury groups -- published disappointing earnings reports.
But official data Thursday brightened the mood, showing the US economy grew 2.8 percent in the second quarter, well above the 1.9 percent rate forecast by analysts, as consumers spent despite high interest rates.
"Following a weaker-than-expected Q1 GDP report, a strong Q2 result is exactly what investors wanted to see," said Bret Kenwell, US investment analyst at eToro trading platform.
"While this print will be subject to revisions, it was a reassuring sigh of relief to see a better-than-expected result," Kenwell said.
The Dow Jones Industrial Average, the broad-based S&P 500 and the tech-heavy Nasdaq were all in the green nearing midday trading, a day after plunging.
Tesla shares rose three percent while Amazon, Apple and Nvidia made smaller gains, but the other Magnificent Seven -- Alphabet, Facebook owner Meta and Microsoft were in the red.
"Investors are becoming increasingly twitchy ahead of next week's earnings reports which sees results from other Mag 7 (Magnificent Seven) members Microsoft, Meta, Apple and Amazon," said David Morrison, senior market analyst at financial services provider Trade Nation.
- 'Investor caution' -
This year's tech rally has been fuelled by high hopes regarding artificial intelligence, but analysts have warned that the party could soon come to an end.
"The robust rally in the first half of the year set high expectations, particularly in the technology sector," said Fawad Razaqzada, analyst at City Index and Forex.com.
"Investors are concerned about the substantial investments in AI by companies like Alphabet, which currently act more as costs than revenue drivers," he said.
"While AI could be profitable long-term, the short-term results have not met expectations, leading to investor caution."
In Europe, Paris closed 1.2 percent lower, Frankfurt fell 0.5 percent and Milan shed 2.6 percent. London ended the day 0.4 percent higher.
Shares in French-Italian chip maker STMicroelectronics plunged almost 14 percent, the worst performer in Paris.
Nearly all sectors suffered, with Jeep owner Stellantis losing 8.7 percent, rival Renault falling 7.5 percent and Gucci owner Kering also down 7.5 percent.
In Asia, Tokyo finished down 3.3 percent, as a stronger yen added to the downward pressure on Japanese exporters.
Seoul's SK Hynix dived nearly nine percent Thursday despite strong earnings, while Samsung lost two percent.
Tokyo-listed Sony was off more than five percent and Japanese investment giant SoftBank, which has pivoted into AI technologies, gave up 9.4 percent.
Hong Kong and Shanghai fell despite a surprise cut in a key rate by the Chinese central bank.
Traders will next set their sights on Friday's release of the personal consumption expenditures (PCE) price index -- the Federal Reserve's favoured gauge of inflation, which could play a role in whether it will cut interest rates in September.
- Key figures around 1350 GMT -
New York - Dow: UP 0.9 percent at 40,191.25 points
New York - S&P 500: UP 0.4 percent at 5,451.21
New York - Nasdaq: UP 0.1 percent at 17,363.75
London - FTSE 100: UP 0.4 percent at 8,186.35 (close)
Paris - CAC 40: DOWN 1.2 percent at 7,427.02 (close)
Frankfurt - DAX: DOWN 0.5 percent at 18,298.72 (close)
Euro STOXX 50: DOWN 1.0 percent at 4,811.28 (close)
Tokyo - Nikkei 225: DOWN 3.3 percent at 37,869.51 (close)
Hong Kong - Hang Seng Index: DOWN 1.8 percent at 17,004.97 (close)
Shanghai - Composite: DOWN 0.5 percent at 2,886.74 (close)
Euro/dollar: UP at $1.0860 from $1.0842 on Wednesday
Pound/dollar: DOWN at $1.2879 from $1.2905
Dollar/yen: DOWN at 153.97 yen from 153.99 yen
Euro/pound: UP at 84.30 pence at 84.08 pence
West Texas Intermediate: UP 0.6 percent at $78.07 per barrel
Brent North Sea Crude: UP 0.3 percent at $81.93 per barrel
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