Let's dissect Tesla first. The stock of Elon Musk's brainchild, soon to be headquartered in Texas, plummeted 8% after dismal quarterly results. Tesla has long been seen as a tech innovator rather than a mere carmaker, which is why the market values it at 113 times its 2024 earnings per share. Compare that to Stellantis, which trades at a measly 3.8 times. But lately, Tesla's magic is wearing thin. Musk's grandiose announcements are losing their luster, and the company is starting to look more like a traditional automaker, facing a mature market, stiffer competition, and long investment cycles. The market once believed Tesla could reach the stratosphere, but now some of that fairy dust has settled. Without the magic, a 113x valuation is tough to justify. Musk is left talking about robot cabs, geopolitics, and artificial intelligence to keep the excitement alive, but it's not always convincing.

Alphabet also underwhelmed, though its stock only dipped 2%. Google's parent company isn't exactly in dire straits, but it's missing that "wow" factor, especially in the realm of artificial intelligence. While it posted better-than-expected Q2 results, YouTube ad revenue fell short of projections.

Two giants that could have lifted global stock markets failed to deliver, dragging Western stocks down this morning. So far, the big letdowns have come from Europe, but if this trend spreads to the US, market sentiment could worsen very quickly. Speaking of Europe, French luxury titan LVMH also posted disappointing results. Unlike Tesla, LVMH trades at a more reasonable 22 times current-year earnings and has a different narrative. The group reported a weaker-than-expected quarterly performance, hit by slowdowns in key markets.

Today's trading session is packed with corporate results and PMI activity indicators, which gauge the confidence of corporate purchasing managers in major economies. Japan's Flash Manufacturing PMI came in at 49.2 points, signaling contraction, against an expected expansion to 50.5 points. In the eurozone, poor PMI readings confirmed an economic slowdown, though inflation figures are moving in the right direction.

In the Asia Pacific, major financial markets are hesitant and mostly bearish. Tokyo lost 1%, Hong Kong, Shanghai, and Seoul dropped around 0.5%, and Sydney edged down 0.1%. India managed to eke out some gains. Europe's main indices are also in the red.

Today's economic highlights:

It's a day dedicated to July's leading PMI indicators in France, Germany, the eurozone, the UK and the USA.  US new home sales and DOE crude inventories are also on the agenda. 

The dollar is worth EUR 0.9219 and GBP 0.7743. The ounce of gold rises to USD 2,419. Oil remains under pressure, with North Sea Brent at USD 81.70 a barrel and US light crude WTI at USD 77.80. The yield on 10-year US debt reaches 4.24%. Bitcoin is trading at USD 66,200.

In corporate news:

  • Alphabet reported better-than-expected quarterly results due to higher advertising sales and solid cloud computing demand, yet shares fell 3.3% before the opening alongside other tech giants Apple, Microsoft, Amazon, Meta Platforms, and Nvidia, which were down between 0.5% and 2%.
  • Tesla's second-quarter gross margin fell short of expectations, impacted by price cuts and increased development efforts in autonomous driving technology, leading to a 7.3% drop in pre-market trading despite an upgrade from CFRA.
  • Visa's third-quarter sales growth missed targets as high borrowing costs curbed consumer spending, with shares down 3% before the opening.
  • Texas Instruments reported earnings above consensus, with stable demand for its analog chips, resulting in a 2.5% stock increase before the opening.
  • Mattel surpassed Wall Street's earnings estimates for the second quarter through strict cost control, despite an unexpected drop in sales, boosting its stock by 2.1% after the close.
  • Seagate Technology forecast first-quarter sales above estimates, sending shares up 4.7% in pre-market trading.
  • Rivian Automotive will face trial over allegations of encouraging employees to steal trade secrets from Tesla, with shares down 2.5% before the opening.
  • Boeing has resumed deliveries of its 737 MAX aircraft to China.
  • Estee Lauder appointed Akhil Shrivastava as CFO, and RBC upgraded its recommendation, leading to a 1.5% stock increase before the opening.
  • Chubb reported better-than-expected second-quarter earnings due to higher premiums and investment returns.
  • Capital One Financial's earnings fell 61% in the second quarter, as reported on Tuesday.
  • EQT posted a smaller-than-expected second-quarter loss, with higher sales volumes helping to offset lower raw material prices, and shares rose 1% in after-hours trading.
  • Enphase Energy reported a higher-than-expected operating profit for the second quarter, aided by a rebound in U.S. demand, with shares up 5.3% before the opening.
  • Allegro Microsystems' shares dropped 6.2% after the close as the company issued 25 million new shares.
  • Ford, IBM, and AT&T are set to release their quarterly results on Wednesday.

Analyst recommendations:

  • Akamai Technologies, Inc.: HSBC downgrades to hold from reduce with a target price of USD 96.
  • Alexandria Real Estate Equities, Inc.: Wedbush downgrades to neutral from outperform with a target price reduced from USD 140 to USD 130.
  • Centene Corporation: Jefferies downgrades to hold from buy with a target price reduced from USD 83 to USD 69.
  • Colgate-Palmolive Company: Jefferies downgrades to hold from buy with a target price reduced from USD 103 to USD 95.
  • Estee Lauder: RBC Capital upgrades to outperform from sector perform with a target price of USD 131.
  • Factset Research Systems, Inc.: Barclays downgrades to underweight from equalweight with a target price reduced from USD 460 to USD 390.
  • Iqvia Holdings Inc.: Jefferies downgrades to hold from buy with a target price reduced from USD 266 to USD 242.
  • Lockheed Martin Corporation: TD Cowen upgrades to buy from hold with a target price raised from USD 480 to USD 560.
  • Medpace Holdings, Inc.: William O'Neil & Co Incorporated drops coverage on the stock.
  • Moody's Corporation: BMO Capital Markets downgrades to market perform from outperform with a target price reduced from USD 482 to USD 455.
  • Procter & Gamble Company: Jefferies downgrades to hold from buy with a target price reduced from USD 182 to USD 175.
  • Spotify Technology S.A.: DZ Bank AG Research upgrades to buy from hold with a target price raised from USD 300 to USD 375.
  • Truist Financial Corporation: Citi downgrades to neutral from buy with a target price raised from USD 45 to USD 47.
  • Ulta Beauty, Inc.: Piper Sandler & Co downgrades to neutral from overweight with a target price reduced from USD 494 to USD 404.
  • Citizens Financial Group, Inc.: Deutsche Bank maintains its buy recommendation and raises the target price from USD 39 to USD 47.
  • East West Bancorp, Inc.: Piper Sandler & Co maintains a neutral recommendation with a target price raised from USD 72.50 to USD 92.
  • Eli Lilly And Company: Wolfe Research maintains its outperform recommendation and raises the target price from USD 909 to USD 1117.
  • First Financial Bankshares, Inc.: Truist Securities maintains its hold recommendation with a target price raised from USD 31 to USD 39.
  • Hp Inc.: HSBC maintains its buy recommendation with a target price raised from USD 37 to USD 45.
  • M&T Bank Corporation: Deutsche Bank maintains its hold recommendation with a target price raised from USD 150 to USD 190.
  • New Fortress Energy Inc.: BTIG maintains its buy recommendation and reduces the target price from USD 48 to USD 35.
  • Seagate Technology Holdings Plc: TD Cowen maintains its buy recommendation and raises the target price from USD 110 to USD 135.
  • Sentinelone, Inc.: Canaccord Genuity maintains its buy recommendation and raises the target price from USD 23 to USD 30.
  • Tesla, Inc.: Truist Securities maintains its hold recommendation with a target price raised from USD 162 to USD 215.
  • Texas Instruments Incorporated: KeyBanc Capital Markets maintains its overweight recommendation and raises the target price from USD 200 to USD 250.
  • The Goldman Sachs Group, Inc.: Deutsche Bank maintains its hold recommendation and raises the target price from USD 400 to USD 500.
  • Zoominfo Technologies Inc.: RBC Capital maintains its underperform recommendation and reduces the target price from USD 12 to USD 9.
  • Anglo American Plc: SBG Securities (Pty) Ltd downgrades to hold from buy with a target price raised from GBP 25.90 to GBP 28.
  • Ascential Plc: Peel Hunt downgrades to hold from buy with a target price raised from GBX 365 to GBX 568.
  • Compass Group Plc: AlphaValue/Baader Europe downgrades to reduce from add with a target price raised from GBP 23.68 to GBP 23.81.
  • Crest Nicholson Holdings Plc: Investec downgrades to hold from buy with a target price raised from GBX 245 to GBX 273.
  • Fresnillo Plc: Peel Hunt upgrades to add from hold with a target price raised from GBX 640 to GBX 645.
  • Primary Health Properties Plc: Deutsche Bank downgrades to hold from buy with a target price reduced from GBX 110 to GBX 103.
  • Segro Plc: Kempen downgrades to neutral from sell with a target price raised from GBX 820 to GBX 925.
  • Taylor Wimpey Plc: Investec downgrades to hold from buy with a target price raised from GBX 157 to GBX 161.
  • Vistry Group Plc: Investec upgrades to buy from hold with a target price raised from GBX 1260 to GBX 1450.