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

July 22 (Reuters) – U.S. stocks closed lower on Friday as Snap’s disappointing earnings spooked investors and shares in ad tech and social media companies fell, offsetting gains in the debt issuer. American Express cards after an optimistic forecast.

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

Snapchat’s owner posted the weakest quarterly sales growth in its history as a public company, sending shares of Snap Inc. down almost 40%, while Twitter Inc. (TWTR.N) reversed earlier losses to add 0.8% after a surprise drop in revenue. read more

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

Meta and Alphabet are set to report earnings next week, along with their mega-cap peers including Apple Inc. (AAPL.O)Microsoft Corporation (MSFT.O) and Amazon.com Inc. (AMZN.O).

The communication services of the S&P 500 (.SPLRCL) and information technology (.SPLRCT) they fell 4.3% and 1.4%, respectively, leading the declines among the 11 sectors in the index.

The Dow Jones Industrial Average (.DJI) fell 137.61 points, or 0.43%, to 31,899.29, the S&P 500 (.SPX) lost 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 are less bad than feared, but they are deteriorating from what we have gotten used to over the past few quarters,” said Bob Doll, CIO of Crossmark Global Investments.

With 106 of the S&P 500 companies reporting earnings as of Friday morning, 75.5% beat analyst expectations, down from 81% for the past four quarters, according to Refinitiv data. read more

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

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

“Economic data is getting weaker…confirming the fact that a recession is very likely in the next 12 months. And he’s trying to figure out what that looks like with economic growth markets slowing down significantly. [and] the Fed in the middle of a pretty aggressive fiscal tightening,” said Megan Horneman, chief investment officer at Verdence Capital Advisors in Hunt Valley, Maryland.

Verizon Communications Inc. (VZN) slumped 6.8% after announcing that it was cutting its full-year profit forecast adjusted as weighted for inflation. american express co (AXP.N) rose 1.9% on the back of strong earnings and a higher revenue forecast. read more

Volume on US stocks was 10.38 billion shares, compared to the 11.53 billion average for the full session over the past 20 trading days.

Downside issues outnumbered advances on the New York Stock Exchange by a ratio of 1.43 to 1; on Nasdaq, a ratio of 2.49 to 1 favored decliners.

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

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

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