S&P500 Forecast: Alphabet Lifts Tech Sector But Dow Falls on Weak IBM

S&P 500 Hovers Near Records as Alphabet Lifts Tech, Tesla and IBM Weigh on Dow

Wall Street traded mixed Thursday as investors parsed earnings from top tech names and eyed progress on U.S.-EU trade negotiations. The S&P 500 edged up 0.2%, the Nasdaq added the same, while the Dow Jones Industrial Average slipped 0.3%, dragged lower by sharp losses in IBM and Tesla.

Fresh earnings reports sparked divergent moves among the so-called Magnificent Seven stocks. Alphabet shares rose after the Google parent beat both revenue and profit forecasts and reaffirmed its commitment to AI investment. This boost helped prop up the Nasdaq and tech sector, which gained 0.34%.

Tesla, however, dropped over 8% after missing earnings expectations and warning of rough quarters ahead, citing falling European demand and regulatory headwinds tied to former President Trump’s new budget legislation.

How Did Alphabet and Tesla Impact the Broader Market?

Alphabet’s beat, driven by strength in its advertising and cloud segments, reassured traders about the near-term payoff of heavy AI spending. Nvidia and other AI-exposed stocks also advanced in sympathy.

Tesla’s weakness, however, dampened broader sentiment in the consumer discretionary sector, which fell 1.08%, the worst-performing group on the day.

IBM shares also tumbled 8% after reporting disappointing software revenue, dragging the Dow into negative territory. Other notable decliners included Dow Inc. (-14.2%) and Chipotle (-12.1%).

What’s the Latest on the U.S.-EU Trade Front?

Optimism surrounding a potential trade agreement between the U.S. and European Union supported risk appetite earlier in the week. Reports suggest the two sides are near a deal that would implement a 15% import tariff, replacing the previously proposed 30%.

President Trump confirmed the 15% figure is emerging as a potential new benchmark for reciprocal tariffs starting August 1. The S&P 500 and Nasdaq had touched fresh intraday records on this news Wednesday.

Are Labor Market Signals Supporting Stocks?

Economic data released Thursday showed initial jobless claims fell to the lowest level since April, but continuing claims remain elevated — signaling a tight hiring environment. This “no fire, no hire” trend suggests companies are holding on to workers, but not expanding payrolls aggressively.

What Should Traders Watch Going Forward?

Markets remain sensitive to earnings surprises, trade developments, and Fed-related headlines. President Trump’s planned visit to the Federal Reserve, the first by a sitting president in decades, is raising questions about central bank independence.

Traders will watch Thursday evening’s earnings from Intel and American Airlines for further direction.

Additionally, any changes in tariff policy come August 1 could prompt renewed volatility. For now, AI optimism and tech leadership continue to support equities, but sector-specific risks are increasingly evident.

More Information in our Economic Calendar.