NEW YORK, July 23 — US stocks ended lower yesterday as shares in social media and ad tech firms lost ground in the wake of earnings from Snap, offsetting gains from card issuer American Express following an upbeat forecast.
Still, all three major indexes posted weekly gains despite yesterday's losses.
Snap Inc’s shares tumbled, after the Snapchat owner posted its weakest-ever quarterly sales growth as a public company, while Twitter Inc reversed earlier losses following a surprise fall in revenue.
Online ad giants Meta Platforms Inc and Alphabet Inc tumbled weighing on the Nasdaq.
Meta and Alphabet are set to post their earnings next week, along with mega-cap peers, including Apple Inc, Microsoft Corp and Amazon.com Inc.
The S&P 500 communication services and information technology tumbled, leading declines among the index’s 11 sectors.
According to preliminary data, the S&P 500 lost 36.71 points, or 0.92 per cent, to end at 3,962.24 points, while the Nasdaq Composite lost 225.94 points, or 1.87 per cent, to 11,835.66. The Dow Jones Industrial Average fell 131.23 points, or 0.41 per cent, to 31,905.67.
“Earnings are coming in less bad than feared, but they’re deteriorating from what we got used to and accustomed to over the last several quarters,” said Bob Doll, CIO at Crossmark Global Investments.
With 106 of the S&P 500 companies having reported earnings through Friday morning, 75.5 per cent have topped analyst expectations, below the 81 per cent beat rate over the past four quarters, according to Refinitiv data.
All eyes are on the Federal Reserve’s 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, the GDP data is likely to be negative again.
Meanwhile, a survey yesterday showed that US business activity contracted for the first time in nearly two years in July, deepening concerns about an economy stunted by high inflation, rising interest rates and dwindling consumer confidence.
“Economic data is coming in weaker.. kind of confirming the fact that a recession is highly likely over the next 12 months. And the markets is trying to figure out what that looks like with economic growth slowing significantly [and] the Fed in the midst of pretty aggressive tightening fiscal,” said Megan Horneman, chief investment officer at Verdence Capital Advisors in Hunt Valley, Maryland Verizon Communications Inc tumbled after announcing it cut its annual adjusted profit forecast as inflation weighs.
American Express Co rose on strong earnings and an increased revenue forecast. — Reuters