Stocks close slightly lower as Wall Street gears up for major tech earnings

Stocks finished slightly lower on Tuesday.

The S&P 500 dipped 0.16% to close at 5,555.74, while the Nasdaq Composite inched down 0.06% to finish at 17,997.35. The Dow Jones Industrial Average lost 57.35 points, or 0.14%, to end at 40,358.09.

— Samantha Subin

The so-called Magnificent Seven will begin posting earnings Tuesday, with Alphabet and Tesla slated to report. These reports will be closely monitored given the recent market volatility. “In our view, a batch of better-than-expected reports could potentially stem the current selloff and spark a forceful bounce,” according to Wolfe Research.

The S&P 500 is down more than 1% in the past week. Alphabet and Tesla have lost 0.5% and 3%, respectively.

— Fred Imbert

HSBC strategist Alastair Pinder said the bull run in global equities can continue.

In a note to clients on Monday, Pinder listed the following five catalysts as potential drivers of upside in the second half of the year:

1. Earnings reports deliver
2. A “goldilocks” macro backdrop that can support valuations
3. Continued momentum in artificial intelligence
4. Better market breadth
5. Few signs of clear sell signals

Still, Pinder said to expect more limited returns in the latter half of 2024.

“In our conversations with clients we get the impression there’s a fixation on the downside risks,” Pinder said. “We believe the market is potentially overlooking five key upside catalysts.”

— Alex Harring

Shares of NXP Semiconductors dropped more than 9%, putting the Netherlands-based semiconductor company on pace for its worst session in more than four years.

The decline came on the heels of a second-quarter earnings miss. NXP Semiconductors posted adjusted earnings of $3.20 per share, falling short of a FactSet estimate of $3.21 per share. Revenue was in line with the $3.13 billion expected.

The Netherlands-based semiconductor company also shared weaker-than-expected guidance for the current quarter and a decline in second-quarter earnings and revenue from the year-ago period.

The popular 30-year mortgage rate dropping below 6% can help current homeowners feel comfortable moving once again, thus shoring up inventory, according to Ivy Zelman, executive vice president of Zelman & Associates.

Zelman said current homeowners feel their mortgages are too good to give up with today’s rates around 7%, creating a feeling of being “locked in.” But she said a drop to somewhere between 5% and 6% can make them feel better about moving, which can in turn increase the number of homes on the market.

“That disincentive in thinking, ‘Wow, I don’t really want to give up this low payment I have’ does give some pause,” she said on CNBC’s “The Exchange.”

With lower rates, they might instead say, “Oh, it’s not that much different, maybe … I can think about moving,” Zelman said. “It doesn’t feel so bad.”

— Alex Harring

Energy stocks are underperforming on Tuesday, struggling for a third straight day.

The Energy Select Sector SPDR Fund (XLE) was down 1.3% in afternoon trading, on track for a third straight losing session. The fund is now down in July as well.

Shares of Pentair soared around 9% during afternoon trading following the water treatment company’s second-quarter earnings beat, putting the stock on pace for a fresh record close.

Pentair’s all-time-high closing price currently sits at $85.44, which was set on March 28 after the stock gained about 0.5%. The stock also hit a new intraday high of $87.74 during Tuesday’s session.

Shares are up nearly 20% this year.

Tuesday’s debut of exchange-traded funds that hold ether is widely seen as a significant event for the crypto industry, although it may not see the success or fanfare that bitcoin ETFs did earlier this year.

“We think it’ll be about 20% as many flows [that] will go into the ether ETF in the first six months that went into bitcoin [ETFs],” Mike Novogratz, CEO of Galaxy Digital, said in a “Squawk Box” interview. He added that it is a significant development for crypto nevertheless.

For more on the initial challenges ether ETFs could face, read our full story on CNBC Pro.

— Tanaya Macheel

Two of the first major technology stocks to report earnings this season are diverging as investors get ready for their releases after Tuesday’s closing bell.

Google parent Alphabet added 0.6% in midday trading. The stock is higher by nearly 3% over the past two days.

On the other hand, electric vehicle maker Tesla slipped about 2% in the session. But that comes after the big jump on Monday, with shares still up more than 3% this week.

Though both stocks are part of the closely watched megacap technology cohort, they have performed much differently this year. Alphabet has soared more than 30% in 2024, while Tesla is just modestly above its flatline on the year after a recent rally.

— Alex Harring

Here are the stocks on the move midday:

• Spotify Technology — Shares surged 12% after the music streaming company posted better-than-expected second-quarter earnings. Gross margin and operating income also surpassed expectations. Analysts said they remain cautiously optimistic despite softness in monthly active user counts, pointing to strong margin performance and the company’s focus on premium subscribers and bundles.
• United Parcel Service — The package delivery company plunged more than 12%, hitting a new 52-week low, after posting a miss on both top and bottom lines in the second quarter. UPS reported $1.79 in earnings per share on $21.80 billion in revenue. Analysts polled by LSEG had estimated $1.99 in earnings per share and revenue of $22.18 billion. Shares were also headed for their worst day on record.
• MSCI — The stock popped more than 9% after the company reported second-quarter earnings that topped Wall Street’s estimates. MSCI posted earnings of $3.64 per share, excluding items, on revenue of $707.9 million. This is above the $3.55 in earnings per share on $696.4 million in revenue that analysts surveyed by FactSet were expecting.

Read the full list here.

— Sean Conlon