by Lisa Pauline Mattackal and David French

(Reuters) – The New York Stock Exchange ended lower on Wednesday, with the S&P 500 and Nasdaq falling to multi-week lows, after lackluster quarterly results from Tesla and Alphabet dampened investor confidence in the sustainability of the boom in big technology stocks that have carried Wall Street so far this year.

The Dow Jones index fell 1.25%, or 504.22 points, to 39,853.87 points.

The broader S&P 500 lost 128.61 points, or 2.31%, to 5,427.13.

The Nasdaq Composite fell by 654.94 points (3.64%) to 17,342.41 points.

The S&P 500 had its worst session since December 2022, falling more than 2% for the first time in 356 sessions. The Nasdaq posted its biggest daily percentage decline since October 2022.

Tesla and Alphabet were the first of Wall Street’s “Magnificent Seven” to report their quarterly results after the close on Tuesday, as investors question the potential overvaluation of major technology stocks.

These Magnificents are such market catalysts that any disappointment in their results can have a significant impact: The S&P 500 and the Nasdaq fell to their lowest closing lows since late June, while the Dow Jones fell below 40,000 for the first time in two weeks.

The positive momentum from the first half of July faded over the past week, said Dave Grecsek, director of investment strategy at Aspiriant. Tesla lost 12.3% — its biggest single-day drop since September 2022 — after reporting its lowest quarterly gross margin in more than five years on Tuesday.

Alphabet declined 5% to its lowest level since May 31, despite better-than-expected quarterly revenue, as investors focused on slowing growth in its advertising sales and a warning about its annual spending.

Following the two groups, communication services fell 3.8% and information technology tumbled 4.1% — their biggest single-session decline since October 2022 and the worst performance of the day among the major S&P 500 sectors. Other major technology stocks, Apple, Microsoft, Amazon, Meta Platforms and Nvidia, all ended lower as well, losing between 2.9% and 6.8%.

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(Written by Jean Terzian)

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