The Dow took a steep dive today as mixed Q2 and a worsening pandemic put a damper on optimism, particularly the news that Apple was in trouble with numerous states investigating consumer protection.  It also did not help that jobless claims climbed to 1.4 million last week while Congress still struggles to decide on a new stimulus package. COVID-19 cases have now passed the 4 million mark and the nation now averages 2,600 new cases every hour.  The only good news today is that Q2 continues in full stride with 113 S&P companies now reporting and 77% beating estimates.  Volume was just a tad below average at just under 10.8 billion. 

Thu  JULY 23, 2020 / 7:25 pm 

Wall Street closes sharply lower on tech selloff

Stephen Culp

DJ: 27,005.84  +165.44        NAS: 10,706.13  +25.76       S&P: 3,276.02  +18.72     7/22

DJ: 26,652.33  -353.51         NAS: 10,461.42  -244.71      S&P: 3,235.66  -40.36      7/23

NEW YORK (Reuters) - Wall Street dropped sharply on Thursday as investors fled market-leading tech shares due to mixed earnings reports and growing signs of a worsening coronavirus pandemic, which could exacerbate a deep economic recession.  The sell-off steepened after a tech watchdog group reported that Apple Inc (AAPL.O) faces consumer protection investigations in multiple states.  The bellwether S&P 500 slid more than 1%, snapping a four-day winning streak with its biggest daily percentage drop since June 26. All three major U.S. stock averages lost ground, with falling momentum stocks Apple, Microsoft Corp (MSFT.O) and Amazon.com (AMZN.O) weighing heaviest.

Apple ended the session down 4.6%. “There has been a real disparity between growth and value and the narrowing has begun,” said Stephen Massocca, Senior Vice President at Wedbush Securities in San Francisco. “There was also a significant delta between large cap and small cap and we’re seeing that narrow as well.”  The Russell 2000 and the S&P Smallcap 600 .SPCY, both small cap indexes, outperformed the broader market.

U.S. jobless claims unexpectedly ticked higher to 1.416 million last week, the Labor Department said.  The number excludes recipients of Pandemic Unemployment Assistance, set to expire on July 31.  Congress kept working to pass new stimulus before that deadline continued, with Senate Republicans announcing they could present their version of the bill to Democrats as early as this week.

Total U.S. coronavirus cases topped 4 million on Thursday, with nearly 2,600 new cases every hour, on average, according to a Reuters tally.

The Dow Jones Industrial Average .DJI fell 353.51 points, or 1.31%, to 26,652.33, the S&P 500 .SPX lost 40.36 points, or 1.23%, to 3,235.66 and the Nasdaq Composite .IXIC dropped 244.71 points, or 2.29%, to 10,461.42.  Of the 11 major sectors in the S&P 500, eight closed in the red, with tech shares .SPLRCT notching the largest percentage drop. 

Second-quarter reporting season is in full-stride, with 113 S&P 500 constituents having reported. Refinitiv data shows that 77% of those have beaten expectations that were extraordinarily low. 

Microsoft Corp (MSFT.O) dropped 4.3% after reporting its cloud computing business Azure reported its first-ever quarterly growth under 50%.  Tesla Inc (TSLA.O) reported a profit for the fourth straight quarter, setting the company up for inclusion in the S&P 500. But the stock slid 5.0% as analysts questioned whether the electric automaker’s stock price matched its performance.  American Airlines Group Inc (AAL.O) jumped 3.7% after announcing it would rethink the number of flights to add in August and September. Also, it reported an adjusted loss per share of $7.82.  Airlines, battered by mandated lockdowns, reversed early losses to cross well into the black. The S&P 1500 Airlines index .SPCOMAIR gained 1.3%.  Twitter Inc (TWTR.N) rose 4.1% after reporting its highest-ever annual growth of daily users.

Declining issues outnumbered advancing ones on the NYSE by a 1.18-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored decliners.  The S&P 500 posted 51 new 52-week highs and no new lows; the Nasdaq Composite recorded 103 new highs and 17 new lows.

Intel Corp (INTC.O) said after the bell that its new 7nm chip technology was six months behind schedule, which sent its shares down more than 8% in extended trading. 

Volume on U.S. exchanges was 10.77 billion shares, compared with the 11.14 billion average over the last 20 trading days.