{"id":29014,"date":"2024-08-07T23:56:00","date_gmt":"2024-08-07T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=29014"},"modified":"2024-08-08T18:45:04","modified_gmt":"2024-08-08T10:45:04","slug":"q2-earning-report","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/07\/q2-earning-report\/","title":{"rendered":"Why market fall after Q2 2024 earning report?"},"content":{"rendered":"\n<p>It might surprise most investors, US stock across board reverse to fall after Q2 earning reports.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/07\/q2-earning-report\/#Consumers_have_begun_to_frugal\" >Consumers have begun to frugal<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/07\/q2-earning-report\/#Companies_have_been_laying_off_employees\" >Companies have been laying off employees<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/07\/q2-earning-report\/#Semiconductor_stocks_fell_across_the_board\" >Semiconductor stocks fell across the board<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/07\/q2-earning-report\/#Earning_reports_are_indeed_not_as_good_as_expected\" >Earning reports are indeed not as good as expected<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/07\/q2-earning-report\/#AI_capital_expense_angers_investors\" >AI capital expense angers investors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/07\/q2-earning-report\/#Recession_indicator_triggered\" >Recession indicator triggered<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/07\/q2-earning-report\/#The_Fed_is_almost_ready_to_cut_interest_rates\" >The Fed is almost ready to cut interest rates<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/07\/q2-earning-report\/#Buffett_sells_half_of_Apple_stock\" >Buffett sells half of Apple stock<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/07\/q2-earning-report\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Consumers_have_begun_to_frugal\"><\/span>Consumers have begun to frugal<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Whether in China or the United States, consumers in the world&#8217;s two largest markets have begun to cut back on spending for different reasons. In the past few years, especially because of the inflation faced by the world, which has caused various prices to soar, consumers have given up on big splurges such as dining in restaurants or traveling, and have become more cautious with their money. <\/p>\n\n\n\n<p>In the United States, even as inflation slows, many consumers are still feeling the cumulative impact of years of rising prices for essentials like groceries, high borrowing costs and sharply increasing insurance costs, adding to budget pressures. <\/p>\n\n\n\n<p>Faced with the double blow of weak consumption in the Chinese and American markets, many multinational companies issued warnings of weak sales and lowered profit expectations when announcing their second-quarter results. These companies span various industries and are quite representative of consumer behavior. The more famous listed companies include Procter &amp; Gamble, PepsiCo, McDonald&#8217;s, Nike, Starbucks, Mercedes-Benz, Heineken, Disney, Airbnb, Hilton, etc.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Companies_have_been_laying_off_employees\"><\/span>Companies have been laying off employees<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Amid the boom in the stock market with the accumulation of artificial intelligence, investors have forgotten that companies around the world have been laying off employees. All well-known companies have been laying off employees continuously in the past two or three years, almost without stopping. In Silicon Valley in the United States alone, more than 100,000 jobs were laid off in the first half of this year.<\/p>\n\n\n\n<p>According to a Morning Consult survey of approximately 4,400 Americans, nearly one-third of respondents said their companies have changed their travel policies, most commonly reducing the frequency of travel and reducing the number of traveling employees. In terms of number of people, 54% of companies are reviewing their travel expenses more carefully. The most commonly axed programs include corporate team bonding trips, trade shows and incentive travel.<\/p>\n\n\n\n<p>Amid economic uncertainty, the U.S. Treasurer&#8217;s top priority is cost cutting. Cost-cutting efforts have become the top priority for financial chiefs of U.S. listed companies.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Semiconductor_stocks_fell_across_the_board\"><\/span>Semiconductor stocks fell across the board<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In the past six months, the biggest change in the U.S. stock market is that &#8220;Semiconductors have replaced software and have become the mainstream investment in the U.S. technology industry.&#8221; &#8220;So far in 2024, four semiconductor companies have contributed one-third to the increase in the S&amp;P 500&#8221;, which has also given birth to Many &#8220;Industries and Manufacturers Benefiting from the Artificial Intelligence Trend&#8221;<\/p>\n\n\n\n<p>Semiconductor stocks have dominated the rise in U.S. stocks over the past two years, especially those benefiting from artificial intelligence chips such as Huida, Advanced Micro Devices, Broadcom, and TSMC.<\/p>\n\n\n\n<p>However, starting from July, the market began to reverse, and semiconductor stocks fell across the board. Semiconductor stocks plummeted, and the decline was worse than other industries.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Earning_reports_are_indeed_not_as_good_as_expected\"><\/span>Earning reports are indeed not as good as expected<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Except for a few companies, such as Apple (ticker: AAPL), Meta (ticker: META), PayPal (ticker: PYPL), Shopify (ticker: SHOP) and MercadoLibre&nbsp; (ticker: MELI), most of the US listed companies have Second-quarter financial reports were generally poor.<\/p>\n\n\n\n<p>The worst thing was that Intel (ticker: INTC) fell 26% the day after its second-quarter financial report was released. It continued to fall by more than 6% the next day, and fell 38% in five days. It also shockingly suspended dividends. Its market value is less than US$81.2 billion.<\/p>\n\n\n\n<p>What&#8217;s more important: Most companies&#8217; financial forecasts are disappointing, exacerbating market concerns, which is more lethal to stock prices than the results of quarterly earnings reports that have already occurred.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"AI_capital_expense_angers_investors\"><\/span>AI capital expense angers investors<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Leading large U.S. technology stocks released financial reports. The annual profit growth rate of these companies in the second quarter has dropped to nearly 30% from 50% in the previous quarter. Analysts expect annual profit growth to slow further in the third quarter to around 17%.<\/p>\n\n\n\n<p>Capital expenditures by technology giants including Alphabet, Amazon, Microsoft, and Meta totaled nearly $60 billion in the second quarter, an increase of two-thirds year-on-year, and a large part of it went to Huida.<\/p>\n\n\n\n<p>The total capital expenditures of the four giants in the first half of the year exceeded 100 billion US dollars. In the first half of this year, Microsoft, Google, Amazon and Meta&#8217;s capital expenditures increased by 50%, with the total capital expenditures exceeding 100 billion US dollars, reaching 106 billion US dollars, setting an unprecedented high. <\/p>\n\n\n\n<p>A large part of these investments is used to support the construction of infrastructure for artificial intelligence. And these investments look to be just the beginning. Both Google and Meta have pledged further investment over the next 18 months. Market analysis predicts that at the current rate of investment growth in technology companies, artificial intelligence-related investments by large technology companies may more than double by the end of this year.<\/p>\n\n\n\n<p>Financial report data shows that each giant invests more than 10 billion US dollars in capital every year. Barclays&#8217; report states that capital expenditures in the AI \u200b\u200bfield are expected to reach a cumulative US$167 billion from 2023 to 2026, and this figure is based on optimistic expectations for demand for AI products. However, in stark contrast, cloud services are expected to generate only $20 billion in incremental revenue by 2026.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Recession_indicator_triggered\"><\/span>Recession indicator triggered<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The United States officially triggered the Sahm Rule, a 100% accurate economic recession indicator, on August 2. U.S. stocks plummeted that day. The following Monday, global stock markets plummeted across the board, and U.S. stocks continued to plummet. Since the stock market is a leading indicator of the economy, the continuous plummeting of U.S. stocks exactly reflects the current situation of the U.S. economy.<\/p>\n\n\n\n<p>For details about Sahm Rule, please see my post of &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/03\/sahm-rule-100-accurate\/\" target=\"_blank\" rel=\"noreferrer noopener\">Sahm Rule, a 100% accurate recession indicator, was triggered<\/a>&#8220;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Fed_is_almost_ready_to_cut_interest_rates\"><\/span>The Fed is almost ready to cut interest rates<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Concerns about an economic recession mainly come from weak economic data in the first week of August, including the weak U.S. non-farm payrolls report on August 2. In addition, the Fed Chairman revealed in a public statement on July 31 that he hinted at the possibility of an interest rate cut in September.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Buffett_sells_half_of_Apple_stock\"><\/span>Buffett sells half of Apple stock<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><a href=\"https:\/\/www.cnbc.com\/2024\/08\/05\/apple-shares-drop-7percent-after-warren-buffetts-berkshire-hathaway-slashes-stake-by-half.html\" target=\"_blank\" rel=\"noreferrer noopener\">Berkshire Hathaway announced its second-quarter financial report on the 3rd and sold 49.4% of its Apple shares, which also brought Berkshire&#8217;s cash reserves to a record high of US$276.94 billion<\/a>. <\/p>\n\n\n\n<p>Affected by this news, Apple fell 4.82% on Monday. Apple is the listed company with the highest market value and is a component of the three major U.S. stock indexes, which also affects the direction of U.S. stocks.<\/p>\n\n\n\n<p>To quote Elon Musk\u2019s view on this matter, he believes that Buffett\u2019s influence is basically the same as that of the Federal Reserve.<\/p>\n\n\n\n<p><strong>Please note<\/strong>: according to &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/06\/27\/buffett-indicator\/\" target=\"_blank\" rel=\"noreferrer noopener\">Powerful and persuasive Buffett indicator, whether market is overheat<\/a>&#8220;, the stock market has clearly reached an extreme level of overheating since last year.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"178\" height=\"100\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2024\/08\/qr-Custom.jpg\" alt=\"earning report\" class=\"wp-image-29015\"\/><figcaption class=\"wp-element-caption\">credit: Ideogram<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/03\/sahm-rule-100-accurate\/\" target=\"_blank\" rel=\"noreferrer noopener\">Sahm Rule, a 100% accurate recession indicator, was triggered<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/07\/q2-earning-report\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why market fall after Q2 2004 earning report?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/06\/27\/buffett-indicator\/\" target=\"_blank\" rel=\"noreferrer noopener\">Powerful and persuasive Buffett indicator, whether market is overheat<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/06\/26\/software-underperforming-ai\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why software underperforming amid the AI craze?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/20\/generative-ai-cost\/\" target=\"_blank\" rel=\"noreferrer noopener\">How Much Does Generative AI Cost?<\/a>&#8221; <\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/04\/11\/us-artificial-intelligence\/\">Major artificial intelligence companies in US stocks market<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/07\/09\/ai-investment-trap\/\">Artificial intelligence investment trap<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/10\/02\/ai-bubble\/\" target=\"_blank\" rel=\"noreferrer noopener\">The artificial intelligence bubble in the capital market is forming<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/04\/03\/openai-and-chatgpt\/\">OpenAI, the Generative Artificial Intelligence rising star and ChatGPT<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/06\/14\/small-language-models\/\" target=\"_blank\" rel=\"noreferrer noopener\">The Importance of Small Language Models (SLM) in AI, how is Apple AI different from others?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/05\/31\/ai-benefits-industries\/\" target=\"_blank\" rel=\"noreferrer noopener\">Artificial intelligence benefits industries<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/04\/10\/four-chip-companies\/#google_vignette\" target=\"_blank\" rel=\"noreferrer noopener\">Four chip companies account for one-third of S&amp;P 500 gains so far this year<\/a>\uff02<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/04\/06\/artificial-intelligence-listed-companies\/\" target=\"_blank\" rel=\"noreferrer noopener\">Top five lucrative artificial lucrative intelligence listed companies<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Except for a few companies, such as Apple, Meta, PayPal, Shopify, and MercadoLibre\u00a0 , most of the US listed companies have Q2 earning reports were generally poor. What&#8217;s more important: Most companies&#8217; financial forecasts are disappointing, exacerbating market concerns, which is more lethal to stock prices than the results of quarterly earnings reports that have already occurred.<\/p>\n","protected":false},"author":1,"featured_media":29015,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[171,1114,407,750,11],"tags":[],"class_list":["post-29014","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-statements","category-capex","category-interest-rate","category-roic","category-buffett"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/29014","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=29014"}],"version-history":[{"count":24,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/29014\/revisions"}],"predecessor-version":[{"id":29084,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/29014\/revisions\/29084"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/29015"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=29014"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=29014"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=29014"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}