Wall Street falls as ad tech, social media stocks weigh

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

July 22 (Reuters) – U.S. stock indexes fell on Friday after dismal quarterly earnings from Twitter and Snap triggered declines in social media and ad tech firms, and offset gains in American Express after an upbeat forecast.

In early afternoon Snap Inc shares plunged nearly 40%, after the Snapchat owner missed revenue targets and declined to provide a forecast on Thursday, while Twitter Inc ( TWTR.N ) fell 1.2% after a surprise drop in revenue. read more

The social media sector is expected to have the slowest global revenue growth ever in the second quarter after a blowout in 2021. read more

Online ad giants Meta Platforms Inc ( META.O ) and Alphabet Inc ( GOOGL.O ) fell 7.5% and 5.6%, respectively, weighing on the Nasdaq (.IXIC).

Meta and Alphabet are due to publish their earnings next week, along with major companies such as Apple Inc ( AAPL.O ), Microsoft Corp ( MSFT.O ) and Amazon.com Inc ( AMZN.O ).

The S&P 500 communications services sector ( .SPLRCL ) fell 4.4%, leading the sector’s decline.

“This could be interpreted as a warning signal that profitability is under pressure as the economic environment weakens,” said Lindsey Bell, chief money and market strategist at Ally Invest, Charlotte, North Carolina.

Investors are focusing on the Federal Reserve’s meeting and US gross domestic product data for the second quarter next week. While the US central bank is expected to raise interest rates by 75 basis points to curb ongoing inflation, GDP data is likely to turn negative again. read more

Meanwhile, a survey on Friday showed U.S. business activity slowed for the first time in nearly two years in July, adding to concerns about an economy hampered by high inflation, rising interest rates and declining consumer confidence. read more

Scorching inflation forced Verizon Communications Inc ( VZ.N ) to cut its annual adjusted earnings forecast, sending shares down 7.4%. American Express Co ( AXP.N ) rose 2.6 percent. read more

Still, the S&P 500 (.SPX) and Dow (.DJI) were set to end the week with their biggest gains in nearly a month, with growth stocks doing most of the heavy lifting after markets cheered quarterly reports from Tesla Inc and Netflix Inc (NFLX .O).

At 12:06 p.m. ET, the Dow was down 72.07 points, or 0.22%, at 31,964.83, the S&P 500 was down 29.70 points, or 0.74%, at 3,969.25, and the Nasdaq Composite was down 2,96,1,1,9,1,9,1,1,9 points. .

“The US economy is relatively strong compared to expectations … earnings are likely to be a positive catalyst as companies do better than investors had feared,” said Jay Hatfield, managing director and portfolio manager at InfraCap in New York.

Analysts now expect annualized S&P 500 earnings to grow 6.2% for the second quarter, down from a forecast of 6.8% at the start of the three-month period, according to Refinitiv data.

Advances outnumbered departures by a 1.12-to-1 ratio on the NYSE, while decliners outnumbered departures by a 1.94-to-1 ratio on the Nasdaq.

The S&P index registered one new 52-week high and 31 new lows, while the Nasdaq registered 23 new highs and 51 new lows.

Reporting by Shreyashi Sanyal and Aniruddha Ghosh in Bengaluru; Additional reporting by Bansari Mayur Kamdar; Editing by Saumyadeb Chakrabarty, Sriraj Kalluvila and Shounak Dasgupta

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