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Wall Street closes in the red as ad tech and social media stocks drop

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

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  • Shares of Snap Inc fell due to slower growth
  • Telecommunications stocks lead industry decline
  • AmEx raises revenue forecast on resilient card spending
  • Indices are falling: 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 companies tumbled, offsetting gains in card issuer American Express after upbeat forecasts.

However, all three major indices posted weekly gains despite Friday’s losses, with the high-tech Nasdaq up 3.3% for the week. The S&P 500 rose 2.4% and the Dow added 2%.

A Snapchat owner reported its weakest quarterly sales growth as a public company, sending Snap Inc shares down nearly 40%, while Twitter Inc (TWTR.N) recouped previous losses, up 0.8% after an unexpected drop in revenue . read more

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Shares of other online companies heavily dependent on advertising, such as tech giants Meta Platforms Inc (META.O) and Alphabet Inc (GOOGL.O), fell 7.6% and 5.6%, respectively, impacting the Nasdaq ( .IXIC).

Meta and Alphabet will post their earnings next week along with mega-cap peers including Apple Inc (AAPL.O), Microsoft Corp (MSFT.O) and Amazon.com Inc (AMZN.O).

The S&P 500 Communications Services (.SPLRCL) and Information Technology (.SPLRCT) fell 4.3% and 1.4%, respectively, leading to declines among 11 sectors of the index.

The Dow Jones Industrial Average (.DJI) fell 137.61 points, or 0.43%, to 31,899.29, while the S&P 500 (.SPX) fell 37.32 points, or 0.93%, to 3961 .63 points and the Nasdaq Composite (.IXIC) rose 225.50 points, or 1.87%, to 11,834.11.

“Revenues are not as bad as feared, but they are deteriorating compared to what we are used to and what we have been used to over the past few quarters,” said Bob Doll, CIO of Crossmark Global Investments.

According to Refinitiv data, 106 S&P 500 companies reported 75.5% earnings up to Friday morning, beating analysts’ expectations, down from 81% in the past four quarters. read more

All eyes are on the Federal Reserve meeting and US second quarter 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 be negative again. read more

Meanwhile, Friday’s review showed that US business activity declined for the first time in almost two years in July, fueling concerns about an economy slowed down by high inflation, rising interest rates and declining consumer confidence. read more

“Economic data is coming in weaker… seems to confirm the fact that a recession is very likely within the next 12 months. And markets are trying to figure out what it looks like when economic growth slows significantly. [and] The Fed is in the midst of a fairly 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% after announcing a cut in its full-year adjusted earnings guidance due to the impact of inflation. Shares of American Express Co (AXP.N) rose 1.9% on strong earnings and higher revenue guidance. read more

Volume on US exchanges was 10.38 billion shares compared to a full session average of 11.53 billion over the last 20 trading days.

The number of falling issues on the NYSE exceeded the number of growing issues by a ratio of 1.43 to 1; on the Nasdaq, a ratio of 2.49 to 1 favored the decline.

S&P 500 records 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 reports by Shreyashi Sanyal, Aniruddha Ghosh and Bansari Mayur Kamdar in Bangalore; Edited by Somyadeb Chakrabarty, Sriraj Kalluvila, Shonak Dasgupta and Aurora Ellis

Our Standards: Thomson Reuters Trust Principles.

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