Nasdaq futures fall as Alphabet and Tesla earnings disappoint

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The waiting game
Wall Street closed slightly below breakeven ahead of gains from tech megacaps. The S&P 500 fell 0.16% on the day after its best performance since early June. The Nasdaq Composite fell 0.06% and the Dow Jones Industrial Average fell 0.14%. Yields on 10-year Treasury notes were muted, while U.S. oil prices fell to a six-week low. Nasdaq futures fell after Alphabet and Tesla reported earnings.

Tesla’s Automotive Revenue Declines
Tesla’s second-quarter earnings fell short of expectations as car sales fell for the second straight quarter. Despite beating revenue estimates, the company reported a 7% drop in car sales, partially offset by $890 million in regulatory credits. Tesla shares fell nearly 8% in extended trading after the earnings report. That came after a difficult first half of the year for Tesla that included layoffs and lower deliveries compared with the previous year.

YouTube ad failed
Google parent Alphabet reported second-quarter results that were largely in line with expectations, but YouTube ad revenue disappointed. Total revenue rose 14% year over year, driven by search and cloud, which topped $10 billion in quarterly revenue for the first time, and $1 billion in operating profit. YouTube ad revenue fell short of estimates amid increased competition from platforms like TikTok. Chief Financial Officer Ruth Porat said the company was committing to a new, multi-year investment in Waymo of $5 billion. Alphabet shares fell 2% in after-market trading.

GM skids
General Motors beat second-quarter earnings estimates, but shares fell 6% as the company restructures its struggling autonomous vehicle and Chinese businesses. GM also said it was slowing its all-electric vehicle plans. Analysts expressed concerns that GM’s profits may have peaked. Morgan Stanley’s Adam Jonas warned that historical trends suggest the current positive results may not be sustainable. RBC Capital Markets’ Tom Narayan underscored GM’s expectations that second-half profits will be $2.5 billion lower than the first half.

UPS is sinking
United Parcel Service missed second-quarter profit and revenue expectations and cut its revenue outlook for 2024. The company’s shares fell 12%, marking its worst trading day on record. UPS now expects 2024 revenue of about $93 billion, down from its previous forecast of as much as $94.5 billion. The report comes as weak freight demand and low shipping prices are driving what some are calling a global freight recession.

(PRO) New goal
Barclays raised its S&P 500 target to 5,600 for the year, saying strong gains in the technology sector would offset weakness in other sectors. That was in line with the median forecast of strategists surveyed by CNBC Pro, even though the S&P 500 is up 16% this year to a record high.

As former President Donald Trump gains increasing popularity among cryptocurrency enthusiasts and billionaires, one cannot help but notice that the Biden administration has allowed investors to trade Bitcoin and Ethereum through a growing number of ETFs.

Ether ETFs officially began trading in the U.S. on Tuesday, marking a significant milestone for the cryptocurrency. The overall reaction was more muted compared to the debut of bitcoin ETFs earlier this year, which brought in more than $16 billion in net inflows.

“We think it’s going to be about 20% of the flows that go into the ether ETF in the first six months that went into the bitcoin (ETF),” Galaxy Digital CEO Mike Novogratz told “Squawk Box.” Still, he said it’s a significant development for cryptocurrencies.

Samara Cohen, CIO of BlackRock ETF & Index Investments, emphasized the technological difference between the two cryptocurrencies. “Bitcoin has gotten a lot of attention because people are calling it digital gold,” Cohen told CNBC’s “Squawk on the Street.” “People may need more time to understand the applications of ethereum.”

“While bitcoin is really known for its scarcity, its limited supply of 21 million, ether is a completely different use case. Ether is known for its utility; it is a programmable blockchain designed to allow developers to build decentralized applications on the blockchain ecosystem.”

“For people like us who are really interested in what the next phase of markets is going to look like and the ability to implement new technology to create innovative use cases and applications, this is a really important space to watch in ethereum.”

Ether may be the future, but investors have also focused on corporate earnings, which are off to a strong start. About 20% of S&P 500 companies have reported second-quarter results, and 80% of them beat expectations, FactSet data shows.

Analysts at Wolfe Research are hopeful that the Magnificent Seven earnings could “spark” a significant uptrend. “In our view, a series of better-than-expected reports could potentially halt the current sell-off and trigger a strong rebound,” Wolfe Research said.

Well, that “strong rebound” may still be a ways off, as both Tesla and Alphabet delivered disappointing post-close results. You can read more about the stocks that made the biggest moves in after-hours trading here

— CNBC’s Jesse Pound, Tanaya Macheel, Jennifer Elias, Lora Kolodny, Samantha Subin, Alex Harring, Fred Imbert and Spencer Kimball contributed to this report.