The S&P 500 fell more than 1% on Friday, trimming its weekly gains, as investors digested disappointing results crack Which shook the social media shares.
The Dow Jones Industrial Average lost 225 points, or 0.70%. The S&P 500 lost 1.23%, while the Nasdaq Composite lost 2.09%.
Those losses cut into the weekly gains for all three major averages, with the Dow almost certainly closing the week 1.7% higher. The S&P 500 is on track for a 2.2% advance, and the Nasdaq is set to extend the week to 3.1%.
Loss in earnings from Snap, which plunged shares as much as 38%, halted this week’s Nasdaq rally. Traders, eyeing better-than-expected results from tech companies, were contemplating whether the market had finally bottomed out.
“Snap has managed to cap the uptrend on the Nasdaq by reporting disappointing earnings, which has created a cascading effect on the S&P,” said Sam Stovall, chief investment strategist at CFRA Research.
“This is just one example of the volatility that investors should expect as earnings are reported, and therefore, prices may fluctuate in response to better or worse results,” Stovall said.
Snapchat parent results, followed by a Stacks of Analyst Downgrades The stock also weighed on other social media and technology stocks, with investors fearing that online advertising could be affected by slowing sales.
Shares of Meta Platforms and Pinterest fell 7% and 14%, respectively, while Alphabet fell more than 5%.
Twitter slightly increased despite reporting Disappointing second quarter results Which missed out on earnings, revenue and user growth. The social media company blamed challenges in the advertising industry, as well as “uncertainty” surrounding the company’s acquisition of Elon Musk, for Miss.
Verizon was the worst-performing member of the Dow after reporting earnings. The wireless network operator posted a decline of more than 7% after cutting its full-year forecast, as higher prices hit phone subscriber growth.
About 21% of the S&P 500 companies have reported earnings so far. According to FactSet, 70% of them have exceeded analysts’ expectations.
Meanwhile, concerns about the state of the US economy also weighed on sentiments after the release of more downbeat economic data. An early reading on the US PMI Composite Output Index – which tracks activity in the services and manufacturing sectors – fell to 47.5, indicating a contraction in economic output. This is also the index’s lowest level in more than two years.
The report comes a day after the US government reported an unexpected increase in weekly jobless claims, raising questions about the health of the labor market.
Still, Wall Street has enjoyed a strong week for the markets, as traders absorbed second-quarter results that came better than fears. On Friday, the S&P 500 touched the 4,000 level, which has not fallen since June 9.
Dow gets a boost after strong earnings report from American Express, The credit card company jumped 2% after beating analysts’ expectations, driven by record consumer spending in sectors like travel and entertainment.
“It’s showing you that market expectations are really low, that when you have low expectations a little bit of good news can go a long way,” said Truist’s Keith Lerner. Investors turned back to growth stocks amid weak economic data.
To be sure, some market participants are not convinced that the bear market is over despite this week’s gains. Since World War II, nearly two-thirds of the one-day rallies in the S&P 500 of 2.76% or more occurred during bear markets, before dropping 71 percent, according to a note from CFRA’s Stovall this week. according.
Stovall believes that the broader market index may rise further towards the 4,200 level before coming back to challenge the June lows.