US OPEN: Tesla sinks, while Google reassures AI optimism (24.07.2025)

Wall Street struggles to find direction as numerous earnings drag indices in different directions. S&P 500 and Nasdaq are up 0.3% from yesterday’s close, with Alphabet’s (GOOGL.US: +1.4%) strong and reassuring report off-setting the disappointment brought by Tesla (TSLA.US: -9%). Dow Jones fell victim to the sell-off of IBM’s shares, losing 0.3%, while Russell 2000 is down 0.5% following an unexpectedly weak Manufacturing PMI reading, which pointed to sector’s contraction in July.

Mixed signals from PMIs

Overall U.S. business activity picked up sharply in July, with the S&P Global Composite PMI climbing to 54.6 — the strongest this year — driven by a robust services sector. Output rose, but factory production slowed and new orders in manufacturing declined slightly amid falling exports and tariff impacts, underscoring growing concerns about the sustainability of this recovery. Employment rose for a fifth month, led by a surge in service-sector hiring, though factory payrolls dipped. Inflation pressures flared, with prices for goods and services posting one of the steepest monthly rises since 2022, driven by tariffs and rising labor costs.

Big Techs spark opposite reactions

Yesterday’s Big Tech earnings did not leave anyone indifferent, with two Magnificent 7 members triggering sharply contrasting emotions in the market. Tesla’s Q2 2025 results showed a 12% revenue decline to $22.5 billion, pressured by a 13% drop in vehicle deliveries amid intense competition and pricing challenges. Adjusted EPS fell to $0.40, missing expectations. In contrast, Alphabet posted strong growth, with Q2 revenue up 14% to $96.43 billion, led by Google Services. Google Search grew 12% to $54.19 billion despite AI competition, YouTube ads rose 13% to $9.8 billion, and cloud revenue surged 32% to $13.62 billion—the highest since Q3 2024.

US100 (H4)

Despite significant selling pressure at the open, Nasdaq buyers stepped in and pushed the US100 contract back above the 10-period exponential moving average (EMA10, yellow), halting the decline just above key support near 23,275. Still, the contract is down 0.1%, with Intel’s earnings likely to influence sentiment in either direction. That said, a strong bullish breakout above recent highs seems unlikely before the rest of the Mag7 earnings.

Source: xStation5

Company news

• American Airlines beat Q2 expectations with revenue of $14.4B and adjusted EPS of $0.95, topping the $0.77 consensus. Strong international and premium demand, 7% AAdvantage growth, and cost discipline supported results despite weather disruptions. Lower fuel prices aided margins. Despite solid performance, Q3 guidance was cautious, with projected loss per share of $0.10–$0.60 and full-year EPS outlook narrowed to ($0.20)–$0.80 amid uncertain travel demand. The lower-range guidance disappointed, driving stock down 7.9%.

• Blackstone reported Q2 adjusted EPS of $1.21, beating estimates by 9%, with revenue up 22% year-over-year to $3.07B, also topping forecasts. This marks its fourth straight earnings and revenue beat. The stock is up 3.4%, though gains are capped by cautious guidance.

• Community Health Systems reported a Q2 loss of $0.05 per share, missing estimates, but revenue of $3.13B beat expectations by 3%. The loss narrowed from $0.17 a year ago. In strategic news, Labcorp will acquire CHS’s ambulatory outreach lab assets across 13 states for $195M in cash, expanding its hospital partnerships while CHS retains inpatient and hospital-based lab operations.The stock sunk about 30%.

• Dow Inc. posted a wider-than-expected Q2 loss of $0.42/share on $10.1B revenue, slashed its dividend by 50% to $0.35, and issued weak Q3 sales guidance. Results were hit by falling prices, lower volumes, and tariff-driven global trade disruptions. Operating cash flow turned negative, prompting plant closures and 800 job cuts in Europe. The stock is down 13.8%

• Honeywell beat Q2 2025 expectations with adjusted EPS of $2.75 and revenue up 8% to $10.35 billion. Growth was driven by Building Automation and Defense & Space, despite margin pressures. The company raised its full-year outlook and progressed its portfolio transformation, aiming to separate into three public companies by late 2026. Nevertheless, stock is down 4.7%.

• IBM beat Q2 expectations with $16.98B in revenue and $2.80 adjusted EPS, but a miss in software sales ($7.39B vs. $7.41B est.) overshadowed strong AI-driven mainframe demand. Shares fell 8.4% as flat transaction processing sales dragged software growth. 

• UnitedHealth shares fell 2% after confirming a DOJ investigation into its Medicare billing practices, involving potential fraud tied to inflated diagnoses for higher reimbursements. The insurer is cooperating and conducting third-party reviews. The probe adds to ongoing turmoil, including leadership upheaval, a major share price drop, and past allegations of overbilling Medicare Advantage.