Stock markets dropped further as a number of companies in a range of industries published disappointing earnings reports

Wall Street stocks mostly slid Thursday despite robust US economic growth that briefly boosted sentiment, while European markets wavered following a flurry of disappointing company results.

A slump began earlier this week after 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 dropped further as a number of companies in a range of industries – from automakers to luxury groups – published disappointing earnings reports.

Official data Thursday brightened the mood temporarily, showing the US economy grew at an annual rate of 2.8% in the second quarter, well above the 1.9% forecast by analysts, as consumers spent despite high interest rates.

Following a weaker-than-expected first quarter GDP report, a strong second quarter result is exactly what investors wanted to see, according to Bret Kenwell, US investment analyst at eToro trading platform.

While this figure will be subject to revisions, it was a reassuring sigh of relief, Kenwell added.

But although the Dow eked out a small gain, the broad-based S&P 500 and tech-heavy Nasdaq both dropped.

Among major tech firms, Amazon and Apple both dropped 0.5%, while Nvidia declined 1.7%.

Others among the Magnificent Seven saw losses too, with Alphabet down 3%, Meta slipping 1.7% and Microsoft pulling back 2.5%.

Investors are becoming increasingly twitchy ahead of next week’s earnings reports, according to David Morrison, senior market analyst at financial services provider Trade Nation.

This year’s tech rally has been fuelled by high hopes regarding AI, but analysts have cautioned that the party could soon end.

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

Investors are concerned about the substantial investments in artificial intelligence by firms such as Alphabet, which currently act more as costs than revenue drivers, he added.