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Visa falls after missing revenue growth forecasts

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AT&T ( T ) rises after beating subscriber-addition estimates

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Enphase Energy ( ENPH ) up after results

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Rivian falls; faces trial in Tesla trade secrets theft

case

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Indexes down: Dow 0.51%, S&P 1.16%, Nasdaq 1.82%

(Updated at 9:51 a.m. ET/ 1351 GMT)

By Ankika Biswas and Lisa Pauline Mattackal

July 24 (Reuters) -

Wall Street fell on Wednesday, with the tech-heavy Nasdaq

leading declines after lackluster quarterly results from Tesla

and Alphabet raised questions about the sustainability of the

Big Tech and AI-led 2024 equity rally.

Tesla slumped 11.2% and was set to lose over $83

billion in market value from Tuesday's close, if losses hold,

after the EV maker reported its lowest profit margin in more

than five years and missed second-quarter earnings estimates.

Google parent Alphabet, too, shed 4.1% despite

posting a second-quarter earnings beat, as investors focused on

a slowdown in advertising growth and the company flagged high

capital expenses for the year.

Alphabet's losses underscored the high earnings bar for

the so-called Magnificent Seven, a set of megacap tech stocks

that have notched double- and triple-digit percentage gains so

far in 2024, riding on the optimism around AI adoption and

expectations of an early start to the Federal Reserve's

interest-rate cuts.

"I can't help thinking (that) if the tech sector does

sneeze, the whole market could catch it," said David Morrison,

senior market analyst at TradeNation.

Other megacaps also fell, with Microsoft ( MSFT ),

Amazon.com ( AMZN ), Meta Platforms ( META ) and Nvidia ( NVDA )

down between 0.8% and 2.9%.

Chary of the high valuation of these companies, market

participants started shifting to underperforming sectors in

mid-July. Morrison sounded a note of caution, saying broad

megacap declines could drag the entire market down.

"If money comes out of the tech sector, it'll come out

quite dramatically. I don't think the first reaction of those

investors is going to be to immediately redeploy those funds

into mid- and small-cap stocks," Morrison said.

The small-cap Russell 2000 fell 0.3% after a 1%

gain in the previous session, while Tesla and Alphabet's results

dragged the Communication Services and Consumer

Discretionary sector indexes down more than 2% each.

In economic data, S&P Global's flash U.S. Composite PMI

Output Index showed business activity climbed to a 27-month high

in July.

Friday's release of the personal consumption

expenditures numbers, the U.S. Federal Reserve's preferred

inflation measure, will be the week's most closely watched

economic data.

Traders largely expect the Fed to cut rates by 25 basis

points by September and anticipate two rate cuts this year,

according to LSEG data.

At 9:51 a.m. ET, the Dow Jones Industrial Average

was down 203.99 points, or 0.51%, at 40,154.10, the S&P 500

was down 64.25 points, or 1.16%, at 5,491.49, and the

Nasdaq Composite was down 328.36 points, or 1.82%, at

17,669.00.

In other earnings, AT&T ( T ) gained 3.6% after beating

forecasts for wireless subscriber additions.

Visa was the biggest Dow decliner, dropping 3.9%

after its third-quarter revenue growth fell short of

expectations.

Solar inverter maker Enphase Energy ( ENPH ) jumped 7.4%

after beating estimates for second-quarter operating profit,

while General Dynamics fell 5.1% after delivering fewer

business jets than expected in the second quarter.

Rivian Automotive ( RIVN ) lost 6.3%. The EV maker will go

on trial over allegations it encouraged its employees who

defected from Tesla to steal trade secrets.

Declining issues outnumbered advancers for a 1.31-to-1

ratio on the NYSE, and for a 1.48-to-1 ratio on the Nasdaq.

The S&P index recorded nine new 52-week highs and three new

lows, while the Nasdaq recorded 58 new highs and 33 new lows.