Wall Street closes lower as ad tech and social media stocks fall

Wall Street closes lower as ad tech and social media stocks fall

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 21, 2022. REUTERS/Brendan McDermid

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  • Snap Inc shares plummet on slowing growth
  • Communication services stocks lead sectoral declines
  • AmEx raises revenue forecast for steady card issuance
  • Indices down: Dow 0.43%, S&P 500 0.93%, Nasdaq 1.87%

July 22 (Reuters) – US stocks closed lower on Friday as disappointing earnings from Snap spooked investors and shares in social media and ad-tech companies fell, erasing gains at card issuer American Express after an upbeat forecast .

Still, all three major indices posted weekly gains despite Friday’s losses, with the tech-heavy Nasdaq ending the week up 3.3%. The S&P 500 gained 2.4% and the Dow gained 2%.

The Snapchat owner posted its weakest quarterly revenue growth ever as a public company, sending Snap Inc shares down nearly 40%, while Twitter Inc (TWTR.N) reversed earlier losses to add 0.8% after a surprise revenue decline . Continue reading

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Other online companies heavily dependent on ads, such as tech giants Meta Platforms Inc (META.O) and Alphabet Inc (GOOGL.O), plunged 7.6% and 5.6% respectively, weighing on the Nasdaq ( .IXIC).

Meta and Alphabet are expected 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).

The S&P 500’s communications services (.SPLRCL) and information technology (.SPLRCT) slumped 4.3% and 1.4%, respectively, leading falls 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, down 1.87% to 11,834.11.

“Revenues are not as bad as feared, but they are deteriorating compared to what we have grown accustomed to over the last few quarters,” said Bob Doll, CIO at Crossmark Global Investments.

With 106 of the S&P 500 companies reporting earnings as of Friday morning, 75.5% have beaten analysts’ expectations and are below the 81% hit rate over the past four quarters, according to Refinitiv data. Continue reading

All eyes are on next week’s Federal Reserve meeting and second quarter US GDP data. While the US Federal Reserve is expected to hike interest rates by 75 basis points to curb runaway inflation, GDP data are likely to be negative again. Continue reading

Meanwhile, a Friday poll showed that US business activity fell in July for the first time in almost two years, adding to concerns about an economy slowed by high inflation, rising interest rates and faltering consumer confidence. Continue reading

“Economic data is weaker…reaffirming the fact that a recession is very likely in the next 12 months. And markets are trying to figure out what that looks like when economic growth slows significantly [and] the Fed in the midst of a fairly aggressive tax hike,” said Megan Horneman, chief investment officer at Verdence Capital Advisors in Hunt Valley, Maryland.

Verizon Communications Inc (VZ.N) plunged 6.8% after announcing it would cut its annual adjusted earnings forecast amid rising inflation. American Express Co (AXP.N) rose 1.9% on strong earnings and a higher revenue forecast. Continue reading

Volume on US exchanges was 10.38 billion shares compared to the average of 11.53 billion for the entire session over the past 20 trading days.

Declining issuance dominated on the NYSE at a 1.43 to 1 ratio; on the Nasdaq, a 2.49 to 1 ratio favored decliners.

The S&P 500 posted 1 new 52-week high and 31 new lows; the Nasdaq Composite posted 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; Edited by Saumyadeb Chakrabarty, Sriraj Kalluvila, Shounak Dasgupta and Aurora Ellis

Our standards: The Thomson Reuters Trust Principles.

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