“US markets should end a solid positive week in mixed fashion as investors ponder disappointing earnings reports and what appears to be a slowdown in the US economy. With the Federal Reserve set to meet next week and hike rates by 75 basis points, the question is how many more rate hikes are likely given a slowing global economy,” says analyst Michael Hewson of CMC Markets.
The S&P 500 Index (SPX -0.06%) fell 0.1%. Futures on the Nasdaq Composite point to a 0.4% loss. The Dow Jones e-Futures are up 78 points, or 0.2 percent, as of this writing.
Snap (Ticker: SNAP) shares fell 33% after the social media business beat sales and earnings forecasts and said revenue was flat year over year recently. Analysts had forecast an increase of almost 20% for the current quarter. At its earnings conference, the company said companies are cutting marketing spend as macroeconomic issues like rising interest rates and rising inflation dampen consumer demand.
That doesn’t bode well for other advertisers. Alphabet (GOOGL) fell 2.6 percent, while Meta Platforms (META) fell 5.2 percent.
Twitter TWTR +0.09% (TWTR) is in a similar situation. The company fell short of revenue and profit targets, but that was partly because monetizable daily active users were less than expected. The stock lost 1.9 percent.
All of this is driving the tech-heavy Nasdaq lower, as the combined market valuation of these three companies accounts for about 12% of the Nasdaq’s market cap.
Because the focus is on the customer, non-advertising social media networks were also made fun of. Pinterest (PINS) and eBay (EBAY) fell 8% and 0.2%, respectively.
So far, however, the damage appears to be limited to this type of equity. Although advertising problems point to a slowing economy, the stock market has already absorbed most of the damage. The Dow, which is less tech-leaning, is down as much as 18 percent this year through mid-June. Now it has risen since hitting that low – and gains continue on Friday.
The market is at a crossroads. What to look out for
Here are five stocks to keep an eye on Friday:
Seagate Technology (STX) tumbled 9.7 percent as the data storage giant cited a difficult economic climate for below-expected quarterly results and a shaky revenue forecast. Seagate reported revenue of $2.6 billion, falling short of Wall Street’s forecast of $2.78 billion and said it expects revenue of about $2.5 billion in the third quarter, well below the $3.03 billion forecast.
Shares in storage technology rivals Micron Technology (MU) fell 4.2 percent and Western Digital (WDC) fell 4.8 percent on the back of macro convergence.
Boston Beer Co. (SAM) shares fell 8.4 percent after the company cut its full-year earnings guidance to $8.50 per share at the halfway point, compared to $13.50 previously.
Shares of SVB Financial (SIVB) fell 13% after the company announced a 38% year-over-year fall in earnings per share and said it would set aside $196 million for credit losses to prepare for a deteriorating macroeconomic environment prepare environment.
Intuitive Surgical (ISRG) shares fell 10% after the company missed sales and earnings targets.
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