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Tesla drops, Alphabet flat before reporting numbers

*

UPS slumps to lowest close since July 2020 after earnings

*

GM beats Q2 expectations, raises forecast; shares slump

*

Spotify ( SPOT ) jumps after results

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Indexes down: Dow 0.14%, S&P 0.16%, Nasdaq 0.06%

(Updates with closing prices)

By David French

July 23 (Reuters) - Wall Street's main indexes ended

slightly lower on Tuesday, having given up meager intraday gains

in the final minutes of trading, as investors switched their

focus to the latest earnings from Alphabet and Tesla

.

The duo kicked off results from the so-called Magnificent

Seven stocks after the market closed, with both recording

positive revenue numbers for the second quarter,

Tesla

recorded a surprise rise in revenue as it handed over more

vehicles than analysts had expected, helped by price cuts and

incentives.

Alphabet

, meanwhile, surpassed revenue estimates driven by a rise in

digital advertising sales and healthy demand for its cloud

computing services.

Before publishing numbers though, the electric vehicle

maker's dropped 2%, with the Google parent's shares rising 0.1%.

Earnings from technology giants will be key in determining

if 2024's record rally can be sustained, or if U.S. stocks are

overvalued. The question of whether a rotation away from

megacaps in favor of underperforming sectors will continue is

also on investors' minds.

The small-cap Russell 2000 was up 1% on the day.

"We're paying attention to earnings, as that's what matters

this week and next, and the price reaction to those earnings

will be very telling," said Jack Janasiewicz, lead portfolio

strategist at Natixis Investment Managers.

On the rotation into smaller-cap stocks, he added: "The jury

is still out and we need some more proof of evidence that this

is sustainable, and that's again going to come down to

earnings."

The megacaps initially buoyed markets on Tuesday, with all

three benchmarks trading in positive territory. However, despite

most of the megacaps continuing to trade higher - Apple ( AAPL )

, Microsoft ( MSFT ), Meta Platforms ( META ) and

Amazon.com ( AMZN ) all gained between 0.3% and 2.1% - the

overall market advances ebbed away in the afternoon, culminating

in the small overall declines.

Helping subdue equity markets were disappointing earnings

from household names.

United Parcel Service ( UPS ), seen as a bellwether for the

global economy, slumped 12.1% after missing earnings estimates

on subdued package delivery demand and higher labor-contract

costs. The stock closed at its lowest level in four years.

General Motors ( GM ) dropped 6.4% despite a second-quarter

results beat and a higher annual profit forecast, while Comcast ( CMCSA )

lost 2.6% after missing revenue estimates.

NXP Semiconductors ( NXPI ) slumped 7.6% after forecasting

third-quarter revenue below estimates, dragging the Philadelphia

SE Semiconductor index 1.5% lower.

Among others, Spotify ( SPOT ) jumped 12% after posting a

record quarterly profit slightly ahead of expectations, while

Coca-Cola rose 0.3% after it increased its annual sales

and profit forecasts,

Of the first 74 S&P 500 companies that reported quarterly

results during this earnings season, 81.1% beat expectations,

according to LSEG data.

Janasiewicz cautioned that while it is early to draw

specific conclusions, the pattern seen so far in the earnings

season was that companies missing numbers were getting hit hard,

while even outperforming doesn't guarantee much of a pop in your

stock, given where market prices and expectations are currently.

"If you miss based on where we are right now, maybe there's

going to be more punishment doled out," he said.

The S&P 500 lost 8.67 points, or 0.16%, to 5,555.74

points, while the Nasdaq Composite lost 10.22 points, or

0.06%, to 17,997.35. The Dow Jones Industrial Average

fell 57.35 points, or 0.14%, to 40,358.09.

Eight of the major S&P sectors ended in negative

territory, with the energy index the worst performer,

down 1.6%, as U.S. crude prices hit a

six-week low

.

Volume on U.S. exchanges was 10.45 billion shares,

compared with the 11.33 billion average for the full session

over the last 20 trading days.