Netflix and Tesla Drive Tech Stocks Down on Wall Street Amid Earnings Reports and Labor Market Resilience

Netflix and Tesla Drive Tech Stocks Down on Wall Street Amid Earnings Reports and Labor Market Resilience

Netflix and Tesla sink Wall Street, and the tech-heavy Nasdaq Composite suffered losses in the Thursday trading session. After a better-than-expected earnings report from the financial and banking sectors, now it’s time for the quarterly earnings report for tech stocks.

As of 11:18 ET, Tesla Inc. stock prices were down by 6.88%, despite exceeding forecasts for its quarterly profit. The company’s statement of potential production slowdowns in the third quarter owing to factory improvements set off the slide. Tesla may continue to lower the price of its electric vehicles to increase demand in order to counter the growing competition from other automakers. However, this can result in smaller profit margins, which would be unsettling to investors and have an impact on the stock price.

Tesla’s financial report showed profits per share (EPS) of $0.91 on revenue of $24.93 billion.

Due to recent price reductions intended to boost sales volume and contend with the escalating competition in the electric vehicle (EV) sector, the company’s gross margins, excluding credits, were constantly monitored. Gross margins decreased by 6.82% to 18.2% in the second quarter compared to the same time last year. This amount was still larger than experts had predicted, exceeding their 16.9% expectation for gross margins.

Moreover, Netflix has released what seems like a strong earnings report, but the company’s revenues came in lower than market expectations. On top of that, Netflix shares fell by more than 9% in the current hour. The decline in Netflix shares was primarily due to one reason, and that is the password crackdown of the second quarter. As usual, the company still aims to find solutions for the high number of subscribers and the common issue of sharing passwords.

As for its revenues, the company totaled $8.19 billion from its platform, slightly lower than the market’s expectation of $8.27 billion.

Meanwhile, the droops on both of these tech giants affected the tech sector. Meta stock prices were down by 2.68%, Alphabet A was down by 0.09%, And Amazon Inc. declined by 2.28%.

On the subject of the U.S. labor market’s strength, the US weekly jobless claims show that, despite continued tightening in the labor market, the number of Americans submitting new claims for unemployment benefits surprisingly fell last week, reaching the lowest level in two months. The Federal Reserve’s attempts to stifle demand were unsuccessful due to this tendency.

According to the Labor Department’s report on Thursday, initial claims for state unemployment benefits decreased by 9,000 to a seasonally adjusted 228,000 for the week ending July 15. This figure represents the lowest level since mid-May. Economists surveyed by Reuters had predicted 242,000 claims for the same week, making the actual number of claims lower than anticipated.

At 11:18 ET, the Dow Jones Industrial Average was up by 0.83%, while the S&P 500 was down 0.24% and the Nasdaq Composite was down 1.16%. With these mixed earnings reports, investors will turn their focus to next week’s policy meeting decision.