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Wall Street closes as ad tech, social media stocks fall

Wall Street slips as ad tech, weighs social media stocks
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  • Shares of Snap Inc.’s growth has slowed
  • Communications services stocks lead sector declines
  • AmEx Resilient Card increases revenue forecast over 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 worried investors and shares of social media and ad tech companies fell, offsetting gains from card issuer American Express after an upbeat forecast.

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

Snapchat’s owner posted the weakest quarterly sales growth for a public company, with shares of Snap Inc. falling nearly 40%, while Twitter Inc. (TWTR.N) Revenue reversed earlier losses to add 0.8% after a surprise decline. Read more

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Other online companies that rely heavily on advertising, such as tech giant Meta Platforms Inc (META.O) and Alphabet Inc. (GOOGL.O) Nasdaq weights fell 7.6% and 5.6%, respectively (.IXIC).

Meta and Alphabet are set to 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).

S&P 500 Communication Services (.SPLRCL) and information technology (.SPLRCT) Among the index’s 11 sectors, declines were 4.3% and 1.4%, respectively.

Dow Jones Industrial Average (.DJI) The S&P 500 fell 137.61 points, or 0.43%, to 31,899.29. (.SPX) The Nasdaq Composite lost 37.32 points, or 0.93%, to 3,961.63. (.IXIC) It fell 225.50 points, or 1.87%, to 11,834.11.

“Earnings are coming in less bad than expected, but worse than what we’ve gotten used to and accustomed to over the past few quarters,” said Bob Doll, CIO of Crossmark Global Investments.

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

Of the 106 S&P 500 companies that reported earnings as of Friday morning, 75.5% topped analysts’ expectations, down from a beat rate of 81% over the past four quarters, according to Refinitiv data. Read more

All eyes are on the Federal Reserve meeting and next week’s second-quarter US gross domestic product data. 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 a stagnant economy fueled by higher inflation, rising interest rates and declining consumer confidence. Read more

“Economic data continues to weaken…kind of confirms that a recession is more likely in the next 12 months. And markets are trying to figure out what that looks like with economic growth slowing significantly [and] The Fed is pretty aggressive in monetary tightening,” said Megan Hornman, chief investment officer at Verdens Capital Advisors in Hunt Valley, Maryland.

Verizon Communications Inc. (VZ.N) It fell 6.8% after announcing a cut in its annual adjusted profit forecast as weighted by inflation. American Express Co. (AXP.N) Strong earnings and increased revenue rose 1.9% on forecasts. Read more

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

The number of issues advanced to the NYSE decreased by a ratio of 1.43-to-1; On the Nasdaq, a 2.49-to-1 ratio favored 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 Shreyshi Sanyal, Aniruddha Ghosh and Bansari Mayur Kamdar in Bengaluru; Editing by Soumyadev Chakraborty, Sriraj Kalluvilla, Shaunak Dasgupta and Arora Ellis

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