Stock Market Today: Momentum in Stocks Halts After Shocking Instant Earnings

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Nasdaq’s impressive multi-day winning streak came to a screeching halt on Friday as negative earnings reaction for social media stocks Instantaneous (SNAP, -39.1%) weighed on the broader tech sector.

Last night, the parent company of photo-sharing app Snapchat announced its weakest quarter ever in terms of revenue growth (+13% year-on-year to $1.11 billion). SNAP also posted a loss per share of 2 cents on earnings of 10 cents per share in the second quarter of 2021, while daily active users grew 18% to 347 million. All three metrics were below what Wall Street expected. Additionally, the company said it would “significantly” slow down hiring to reduce costs.

Twitter (TWTR, +1.1%) earnings were also in focus today. Ahead of today’s open, the social media platform said second-quarter revenue fell 0.8% year-on-year to $1.18 billion – well below industry estimates. analysts – with ad revenue up just 2% for the three-month period.

The company’s revenue was “affected by a more challenging advertising landscape, as well as the negative implications of the impending acquisition of Elon Musk,” said CFRA Research analyst Angelo Zino. “While it’s impossible to decipher the exact impact Musk’s actions had on TWTR, we believe the results provide further support that Elon had a noticeable negative impact on the company’s fundamentals. .” As for “Musk’s actions”, the analyst refers to the You’re here (TSLA, -0.2%) The CEO is ending his $44 billion takeover of Twitter, sparking a legal battle between the two sides.

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After three straight sessions of strong gains, heavy tech Nasdaq Compound fell 1.9% to end at 11,843. S&P 500 Index (-0.9% to 3,961) and Dow Jones Industrial Average (-0.4% to 31,899) also ended their three-day winning streaks.

Despite today’s negative price action, all three major benchmarks finished higher on a weekly basis.

Other news on the stock market today:

  • Small cap Russell 2000 lost 1.6% to 1,806.
  • U.S. Crude Futures fell 1.7% to end at $94.70 a barrel.
  • Gold Futures Contracts rose 0.8% to end at $1,727.40 an ounce.
  • Bitcoin fell 2.6% to $22,588.60. (Bitcoin trades 24 hours a day; prices shown here are as of 4 p.m.)
  • Verizon Communications (VZ) was the worst stock in the Dow Jones today, falling 6.7% after the telecommunications company reported second-quarter earnings below expectations of $1.31 per share and cut its forecast for the whole year. Second-quarter revenue of $33.79 billion came in just above consensus. “We think VZ is currently between a rock and a hard place,” said CFRA Research analyst Keith Snyder (Sell). “On the one hand you have AT&T (T), which is extremely aggressive with promotions, and on the other hand you have T-Mobile (TMUS), which currently has a vastly superior 5G network.
  • American Express (AXP) gained 2.0% after the credit card company reported earnings. In the second quarter, AXP earned $2.57 a share on $13.4 billion in revenue, more than analysts expected. The company also raised its revenue forecast for the full year. “We are maintaining our buy rating on American Express following second quarter results, which were helped by a continued strong rebound in billed business, but impacted by a $1 billion change in credit costs with a provision for loss. of $410 million against a credit loss recovery of $606 million,” said Stephen Biggar, analyst at Argus Research.

Next week will be busy (and potentially volatile)

There are a lot of things going on next week that could trigger more volatility in the markets. For starters, we’re entering the busiest week of the second quarter earnings season so far, with several mega-cap tech names – such as Apple (AAPL) and Microsoft (MSFT) – set to report. Wall Street will be watching to “see how margins hold up in previous stock market darlings, and hope they paint a prettier picture than the underperformance of U.S. banks,” says Sophie Lund-Yates, an equity analyst at a firm financial institution based in the United Kingdom. Hargreaves Lansdown.

Additionally, the Federal Reserve will release its latest policy decision at 2 p.m. EST on Wednesday, July 27, followed by a press conference by Fed Chairman Jerome Powell.

“The market response will likely be closely tied to comments at the press conference and the updated summary of economic projections,” said Timothy Chubb, chief investment officer at registered investment adviser Girard, a wealth division of University.

The market currently expects a rate hike of 75 basis points (one basis point equals one-hundredth of a percentage point), and any deviation from that could trigger a reaction, Chubb said. He adds that other large market moves could “be associated with comments or language suggesting that the current rate of policy tightening is too high or not enough to rein in inflation.”

Investors looking for firmer ground amid stormier days may find it in some of the more defensive sectors, such as health care and real estate investment trusts (REITs), which tend to be under pressure. able to withstand choppy markets with stable growth and attractive dividend yields. . But for more ideas, check out this list of the 43 best stocks for a turbulent market, compiled by the strategists at UBS Research Management. The names featured here are the company’s most compelling picks for weathering periods of volatility.

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