Wall Street closes lower as ad tech, social media stocks fall

July 22 (Reuters) – U.S. stocks fell on Friday as disappointing earnings from Snap spoke to investors and declines in stakes in social media and ad technology companies, following a positive forecast from card issuer American Express.

Still, all three major indexes posted weekly gains despite losses on Friday. The S&P 500 rose 2.4%, and the Dow gained 2%.

Snapchat’s owner posted its weakest quarterly sales growth to date as a public company, sending Snap Inc shares down nearly 40%, while Twitter Inc ( TWTR.N ) reversed earlier losses following a 0.8% drop in revenue. Read more

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

Meta and Alphabet are set to post earnings next week, along with their megacap peers, including Apple Inc ( AAPL.O ), Microsoft Corp ( MSFT.O ) and Amazon.com Inc ( AMZN.O ).

The S&P 500’s communications services (.SPLRCL) and information technology (.SPLRCT) fell 4.3% and 1.4%, respectively, leading declines among the index’s 11 sectors.

The Dow Jones Industrial Average (.DJI) was down 137.61 points, or 0.43%, at 31,899.29, the S&P 500 (.SPX) was down 37.32 points, or 0.93%, at 3,961.63 and the Nasdaq Composite (.22IC) was down 37.32 points, or 0.55%, at 3,961.63. 1.87%, to 11,834.11.

Bob Dole, CIO at Crossmark Global Investments, said, “Earnings are coming in worse than feared, but worse than what we’ve gotten used to over the past several quarters.

When 106 of the S&P 500 companies reported earnings through Friday morning, 75.5% topped analysts’ expectations, down from an 81% weighting over the past four quarters, according to Refinitiv data. Read more

All eyes are on next week’s Federal Reserve meeting and second quarter US GDP data. The U.S. Federal Reserve is expected to raise interest rates by 75 basis points to curb runaway inflation, while GDP data is likely to turn negative again. Read more

Meanwhile, a survey on Friday showed that U.S. business activity contracted in July for the first time in nearly two years, raising concerns about the economy amid high inflation, rising interest rates and declining consumer confidence. Read more

“The economic data is weakening. It’s very likely that there will be a recession in the next 12 months. And the markets are trying to figure out what it will look like when economic growth slows down significantly.” [and] The Fed is in the midst of aggressive fiscal tightening, said Megan Horneman, chief investment officer at Verdens Capital Advisors in Hunt Valley, Maryland.

Verizon Communications Inc ( VZ.N ) fell 6.8 percent after announcing it was cutting its annual adjusted profit forecast as inflation weighed. American Express Co ( AXP.N ) rose 1.9% on strong earnings and earnings forecasts. Read more

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

It outnumbered moving issues on the NYSE by a 1.43-to-1 ratio. On the Nasdaq, it favored decliners by a 2.49-to-1 ratio.

The S&P 500 posted 1 new 52-week high and 31 new lows. The Nasdaq Composite hit 32 new highs and 74 new lows.

Reporting by Echo Wang in New York; Additional reporting by Shreyashi Sanyal, Aniruddha Ghosh and Bansari Mayur Kamdar in Bengaluru; Editing by Saumyadeb Chakrabarty, Sriraj Kalluvila, Shounak Dasgupta and Aurora Ellis

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