US stocks opened lower on July 23 (local time), with the Dow Jones Industrial Average down 0.94% to 51,725.23, the S&P 500 falling 0.95% to 7,427.92, and the Nasdaq Composite dropping 1.71% to 25,252.45 as of 9:51 AM. The declines followed disappointing Big Tech earnings from Alphabet and Tesla, which kicked off the Magnificent Seven's earnings season after market close on the prior day, alongside rising oil prices driven by escalating Red Sea tensions. Alphabet's raised capital expenditure guidance to $195-205 billion from $180-190 billion overshadowed its strongest quarterly cloud growth on record, while Tesla reported its first negative quarterly free cash flow in over two years.
Alphabet and Tesla Earnings Drive Big Tech Sell-Off
Alphabet stock fell 6.40% despite recording its strongest quarterly growth in cloud computing business history. Market focus shifted to the company's elevated capital expenditure forecast, which was raised from a prior range of $180-190 billion to $195-205 billion for the year. Tesla shares dropped 12.29% after the company disclosed its first negative quarterly free cash flow in over two years for the second quarter.
Brent Crude Surpasses $100 per Barrel on Red Sea Tensions
Brent crude oil surpassed $100 per barrel for the first time since May on July 23. The price surge followed Houthi forces' announcement of military operations targeting two Saudi Arabian oil tankers in the Red Sea, after declaring a maritime blockade against Saudi vessels. US President Donald Trump warned on Truth Social that "if they do this again (attack commercial ships), the US will hold Iran accountable given that the Houthis are Iran's proxy forces." The rising oil prices reignited inflation concerns among market participants.
Fed Rate Hike Probability Rises to 35.8% Amid Jobless Claims Data
The probability of a Federal Reserve rate hike at the July 28-29 monetary policy meeting increased to 35.8% from 11.8% on July 16, according to CME FedWatch. US initial jobless claims fell to 187,000, marking the lowest level since 1969. Jim Reid, analyst at Deutsche Bank, stated: "The top priority for markets this morning remains inflation. Brent oil prices have risen as Middle East tensions continue to escalate. Attacks between the US and Iran show no signs of abating, and the Houthis' attack on two tankers in the Red Sea yesterday has heightened concerns about the conflict spreading. As a result, oil prices have risen and fueled speculation about additional rate hikes."
Lockheed Martin Gains 10.97% on Raised Guidance
Defense contractor Lockheed Martin rose 10.97% after second-quarter results exceeded expectations and the company raised its annual guidance. The company reported Q2 earnings per share of $7.94 and revenue of $20.06 billion, surpassing market estimates of $7.19 and $19.34 billion respectively. Enterprise software company ServiceNow gained 1.93% after raising its annual subscription revenue forecast for the second time this year. American Airlines fell 7.57% after cutting its annual profit outlook for the second time due to rising fuel costs, projecting adjusted EPS between a loss of $0.65 and a profit of $0.65, down from an initial January guidance of $1.70-2.70.
FAQ
What caused US stocks to open lower on July 23?
US stocks opened lower due to disappointing Big Tech earnings from Alphabet and Tesla, combined with rising oil prices driven by Red Sea tensions. Alphabet's capital expenditure guidance increase to $195-205 billion and Tesla's first negative quarterly free cash flow in over two years weighed on investor sentiment.
Why did Brent crude oil surpass $100 per barrel on July 23?
Brent crude surpassed $100 per barrel for the first time since May after Houthi forces announced military operations targeting two Saudi Arabian oil tankers in the Red Sea. The escalating Middle East tensions, including attacks between the US and Iran, raised concerns about supply disruptions and fueled the price surge.
