Sawt Falasteen - Stock markets struggle after tech-led selloff

A slump began earlier this week following disappointing earnings reports from US electric car giant Tesla and Google owner Alphabet, two of the "Magnificent Seven" stocks that have fuelled a global rally this year.

Stock markets fell further as a slew of companies in a range of industries -- from automakers to luxury groups -- published disappointing earnings reports.

Providing brighter news, official data Thursday showed that the US economy grew 2.8 percent in the second quarter, well above the 1.9 percent rate forecast by analysts, as consumers spent despite high interest rates.

The Dow Jones Industrial Average was in the green in morning deals following the GDP data release, but the broad-based S&P 500 and the tech-heavy Nasdaq fell further.

Tesla shares rose but the other Magnificent Seven -- Alphabet, Amazon, Apple, Facebook owner Meta, Microsoft and Nvidia retreated.

"Investors are becoming increasingly twitchy ahead of next week's earnings reports which sees results from other Mag 7 (Magnificent Seven) members Microsoft, Meta, Apple and Amazon," said David Morrison, senior market analyst at financial services provider Trade Nation.

- 'Investor caution' -

This year's tech rally has been fuelled by high hopes regarding artificial intelligence, but analysts have warned that the party could soon come to an end.

"The robust rally in the first half of the year set high expectations, particularly in the technology sector," said Fawad Razaqzada, analyst at City Index and Forex.com.

"Investors are concerned about the substantial investments in AI by companies like Alphabet, which currently act more as costs than revenue drivers," he said.

"While AI could be profitable long-term, the short-term results have not met expectations, leading to investor caution."

In Europe on Thursday, Paris tumbled almost 1.8 percent in afternoon trading after Tokyo closed down 3.3 percent, as a stronger yen added to the downward pressure on Japanese exporters.

Shares in French-Italian chip maker STMicroelectronics plunged 14 percent and Infineon Technologies shed more than XX percent.

Nearly all sectors suffered, with automaker Renault crashing over 11 percent, Jeep owner Stellantis falling 9.7 percent and Gucci owner Kering down seven percent.

Among the rare risers was consumer goods giant Unilever, which jumped over six percent on well-received earnings.

Seoul's SK Hynix dived nearly nine percent Thursday despite strong earnings, while Samsung lost two percent.

Tokyo-listed Sony was off more than five percent and Japanese investment giant SoftBank, which has pivoted into AI technologies, gave up 9.4 percent.

Hong Kong and Shanghai fell despite a surprise cut in a key rate by the Chinese central bank.

The earnings shock comes as major economies struggle to mount growth recoveries even as central banks start to cut interest rates in the face of cooler inflation.

Business confidence in Europe's biggest economy Germany unexpectedly weakened in July, a closely watched survey showed Thursday.

Traders will next set their sights on Friday's release of the personal consumption expenditures (PCE) price index -- the Federal Reserve's favoured gauge of inflation, which could play a role in whether it will cut interest rates in September.

- Key figures around 1405 GMT -

New York - Dow: UP 0.4 percent at 40,022.71 points

New York - S&P 500: DOWN 0.5 percent at 5,402.51

New York - Nasdaq: DOWN 1.3 percent at 17,118.22

London - FTSE 100: DOWN 0.1 percent at 8,144.27

Paris - CAC 40: DOWN 1.8 percent at 7,378.03

Frankfurt - DAX: DOWN 1.1 percent at 18,188.16

Euro STOXX 50: DOWN 1.7 percent at 4,780.07

Tokyo - Nikkei 225: DOWN 3.3 percent at 37,869.51 (close)

Hong Kong - Hang Seng Index: DOWN 1.8 percent at 17,004.97 (close)

Shanghai - Composite: DOWN 0.5 percent at 2,886.74 (close)

Euro/dollar: UP at $1.0843 from $1.0842 on Wednesday

Pound/dollar: DOWN at $1.2875 from $1.2905

Dollar/yen: DOWN at 153.44 yen from 153.99 yen

Euro/pound: UP at 84.23 pence at 84.08 pence

West Texas Intermediate: DOWN 1.2 percent at $76.67 per barrel

Brent North Sea Crude: DOWN 1.2 percent at $80.71 per barrel

burs-lth/jj

M.AbuKhalil--SF-PST