The S&P 500 fell nearly 1% on Friday, but completed the week higher, as traders digested disappointing outcomes from Snap that despatched social media shares reeling.
The Dow Jones Industrial Average misplaced 137.61 factors, or 0.43%, to 31,899.29. The S&P 500 declined 0.93% to three,961.63, whereas the Nasdaq Composite traded 1.87% decrease to 11,834.11.
Those losses minimize into weekly features for all three main averages, with the Dow closing out the week nearly 2% higher. The S&P 500 superior about 2.6%, and the Nasdaq capped the week up 3.3%.
An earnings miss from Snap, which despatched shares tumbling about 39.1%, halted this week’s Nasdaq rally. Traders, eyeing some better-than-expected outcomes from tech firms, had deliberated whether or not markets had lastly discovered a backside.
“Snap has managed to snap the uptrend in the Nasdaq by reporting disappointing earnings, which has created a cascading effect on the S&P,” mentioned Sam Stovall, chief funding strategist at CFRA Research.
“This is just an example of the volatility that investors should expect as earnings are reported, and, therefore, could cause fluctuations in prices in response to better than or worse than results,” Stovall added.
The outcomes from the Snapchat mother or father had been adopted by a slew of analyst downgrades on the inventory. Snap’s quarterly report additionally weighed on different social media and tech shares, which traders feared might face slowing internet advertising gross sales.
Shares of Meta Platforms and Pinterest fell about 7.6% and 13.5%, respectively, whereas Alphabet misplaced 5.6%.
Twitter rose 0.8% regardless of reporting disappointing second-quarter outcomes that missed on earnings, income and person progress. The social media firm blamed challenges within the advert trade, in addition to “uncertainty” round Elon Musk’s acquisition of the corporate, for the miss.
Verizon was the worst-performing member of the Dow after reporting earnings. The wi-fi community operator dropped 6.7% after reducing its full-year forecast, as higher costs dented telephone subscriber progress.
About 21% of S&P 500 firms have reported earnings to date. Of these, nearly 70% have crushed analyst expectations, in keeping with FactSet.
Economic knowledge weighs on sentiment
Meanwhile, considerations over the state of the U.S. financial system additionally weighed on sentiment after the discharge of extra downbeat financial knowledge. A preliminary studying on the U.S. PMI Composite output index — which tracks exercise throughout the providers and manufacturing sectors — fell to 47.5, indicating contracting financial output. That’s additionally the index’s lowest stage in additional than two years.
The report comes a day after the U.S. authorities reported an surprising uptick in weekly jobless claims, elevating questions concerning the well being of the labor market.
Still, Wall Street has loved a robust week for markets, as merchants absorbed second-quarter outcomes which have are available higher than feared. On Friday, the S&P 500 touched the 4,000 stage, which it hasn’t hit since June 9, earlier than coming again down.
The Dow bought a lift earlier within the session following a sturdy earnings report from American Express. The bank card firm jumped about 1.9% after beating analyst expectations, due to file shopper spending in areas comparable to journey and leisure.
“This is showing you that market expectations are really low, that a little bit of good news can go a long way when you have low expectations,” mentioned Truist’s Keith Lerner, noting that traders rotated again into progress shares even amid weak financial knowledge.
To ensure, some market individuals don’t imagine the bear market is over regardless of this week’s features. Since World War II, nearly two-thirds of one-day rallies of two.76% or extra within the S&P 500 occurred throughout bear markets, with 71% occurring earlier than the underside was in, in keeping with a word this week from CFRA’s Stovall.
Stovall believes the broader market index might rally as excessive because the 4,200 stage earlier than coming again all the way down to problem June lows.
— CNBC’s Fred Imbert contributed to this report.