Wall Street closes lower as ad tech and social media shares plummet

July 22 (Reuters) – U.S. stocks closed lower on Friday as Snap scared investors off and shares of social media and ad tech companies tumbled.

Still, all three major indices posted weekly gains despite Friday’s losses as the tech giant Nasdaq closed the week up 3.3%. The S&P 500 was up 2.4% and the Dow was up 2%.

The Snapchat owner reported its weakest quarterly sales growth ever as a publicly traded company, dropping shares of Snap Inc by nearly 40%, Twitter Inc. (TWTR.N) It reversed previous losses to add 0.8% after surprise drop in revenue. Read more

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

Meta and Alphabet are set to release earnings next week, along with their 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) decreased by 4.3% and 1.4%, respectively, leading the declines among the 11 sectors of the index.

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

“Earnings sound less bad than feared, but they’ve been down from what we’ve been used to and used to over the past few quarters,” said Bob Doll, CIO of Crossmark Global Investments.

According to Refinitiv data, 106 of the S&P 500 companies reported earnings through Friday morning, with 75.5% beating analyst expectations, below the 81% defeat rate in the past four quarters. Read more

All eyes are on the Federal Reserve’s meeting next week and second-quarter US gross domestic product data. GDP data is likely to turn negative again, as the US central bank is expected to raise interest rates by 75 basis points to curb runaway inflation. Read more

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

“Economic data sounds weaker… kind of confirming the fact that a recession is likely in the next 12 months. And markets are trying to understand what that looks like with economic growth slowing significantly. [and] “The Fed is in the midst of some pretty aggressive fiscal tightening,” said Megan Horneman, chief investment officer at Verdence Capital Advisors in Hunt Valley, Maryland.

Verizon Communications Inc. (VZ.N) It fell 6.8% after it announced that it had lowered its annual adjusted profit forecast as inflation weighted. American Express Company (AXP.N) It was up 1.9% on strong earnings and higher revenue forecast. Read more

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

Decreasing issues outstripped issues that advanced 1.43 to 1 on the NYSE; The Nasdaq and its 2.49 to 1 ratio favored the declines.

The S&P 500 reported 52-week highs of 1 new and 31 new lows; The Nasdaq Composite recorded 32 new highs and 74 new lows.

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

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