Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 21, 2022. REUTERS/Brendan McDermid
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- Shares of Snap Inc tumbled on slowing growth
- Communications services stocks lead sector decliners
- AmEx Raises Revenue Forecast from Sustainable Card Spending
- Indexes down: Dow 0.43%, S&P 500 0.93%, Nasdaq 1.87%
July 22 (Reuters) – U.S. stocks ended lower on Friday as disappointing earnings from Snap spooked investors and shares in social media and ad tech firms fell, offsetting gains from card issuer American Express after an upbeat forecast.
Still, all three major indexes posted weekly gains despite Friday’s losses, with the tech-heavy Nasdaq closing the week 3.3 percent higher. The S&P 500 advanced 2.4% and the Dow gained 2%.
The owner of Snapchat reported its weakest quarterly sales growth as a public company, sending Snap Inc shares down nearly 40 percent, while Twitter Inc ( TWTR.N ) reversed earlier losses to add 0.8 percent after a surprise drop in income. Read more
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Other online companies that depend heavily on advertising, such as tech giants Meta Platforms Inc ( META.O ) and Alphabet Inc ( GOOGL.O ), fell 7.6 percent and 5.6 percent, respectively, weighing on the Nasdaq ( .IXIC ).
Meta and Alphabet are set to report earnings next week, along with mega-cap rivals including Apple Inc ( AAPL.O ), Microsoft Corp ( MSFT.O ) and Amazon.com Inc ( AMZN.O ).
Communications services ( .SPLRCL ) and information technology ( .SPLRCT ) S&P 500 fell 4.3 percent and 1.4 percent, respectively, leading decliners among the index’s 11 sectors.
The Dow Jones Industrial Average (.DJI) fell 137.61 points, or 0.43%, to 31,899.29, the S&P 500 (.SPX) lost 37.32 points, or 0.93%, to 3,961.63 , and the Nasdaq Composite (.IXIC) fell 225.50 points, or 1.87%, to 11,834.11.
“Earnings came in less than expected, but worse than what we’ve been used to over the past few quarters,” said Bob Dole, CIO at Crossmark Global Investments.
With 106 of the S&P 500 companies reporting earnings through Friday morning, 75.5 percent beat analysts’ expectations, down from 81 percent over the past four quarters, according to Refinitiv data. Read more
All eyes are on the Federal Reserve meeting and second quarter US gross domestic product data next week. While the US central bank is expected to raise interest rates by 75 basis points to curb runaway inflation, GDP data is likely to turn negative again. Read more
Meanwhile, a survey on Friday showed U.S. business activity contracted for the first time in nearly two years in July, deepening concerns about an economy stalled by high inflation, rising interest rates and declining consumer confidence. Read more
“Economic data is coming in weaker … kind of reinforces the fact that a recession is very likely in the next 12 months.” And markets are trying to figure out what that looks like with a significant slowdown in economic growth [and] Fed in the midst of some pretty aggressive fiscal tightening,” said Megan Horneman, chief investment officer at Verdence Capital Advisors in Hunt Valley, Maryland.
Verizon Communications Inc ( VZ.N ) tumbled 6.8 percent after it said it cut its annual adjusted profit forecast due to inflation. American Express Co ( AXP.N ) rose 1.9% on strong earnings and a raised revenue forecast. Read more
Volume on US exchanges was 10.38 billion shares, compared to the 11.53 billion average for the entire session over the past 20 trading days.
Declining issues outnumber rising ones on the NYSE by a ratio of 1.43 to 1; on the Nasdaq, a ratio of 2.49 to 1 favored the decliners.
S&P 500 posts 1 new 52-week high and 31 new lows; The Nasdaq Composite recorded 32 new highs and 74 new lows.
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Reporting by Echo Wang in New York; Additional reporting by Shreyashi Sanyal, Aniruddha Ghosh and Bansari Mayur Kamdar in Bengaluru; Editing by Saumyadeb Chakrabarty, Sriraj Kalluvila, Shounak Dasgupta and Aurora Ellis
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