Tech Weakness Drags U.S. Stocks Lowe, European and Asian Markets Gain

Barry Adams
22 Jul, 2022
New York City

Benchmark indexes on Wall Street traded lower led by a decline in tech and advertising stocks after weak results from Snap and Twitter. 

The S&P 500 index fell 0.6% to 3,973.73 and the Nasdaq Composite index declined 1.5% to 11,881.88. 

For the week, the S&P 500 index increased 2.6% and the Nasdaq Composite rose 3.3%. 

Better-than-expected earnings from Netflix and Tesla lifted tech stocks in the week but the market rally halted after Snap reported wider loss and Twitter said revenues fell last quarter. 

Meta Platforms declined 7.8%, Pinterest plunged 13.5%, and Alphabet dropped 5.6%. 

Futures of crude oil decreased $1.74 to $94.61 a barrel and natural gas advanced 37 cents to $8.30 a unit. 

The yield on 10-year Treasury notes declined 11 ticks to 2.79%.

The euro inched higher to $1.0208 and the dollar eased against the Japanese yen to 136.04. 

American Express rose 2.3% to $153.49 after the financial services company said total purchase volume on its network jumped 25% to $394 billion and revenues net of interest surged 31% to $13.4 billion.. 

Net income in the quarter declined to 14% to $1.96 billion or $2.57 a diluted share from $2.28 billion or $2.80 a diluted share. 

Boston Beer fell 3.9% to $394.70 after the craft brewery said second quarter net revenues increased 2.2% to $616 million. 

Net income decreased to $53.3 million or $4.31 per diluted share from $59.2 million or $4.75 per diluted share a year ago. 

The revised guidance is based on the lowered estimate for the shipment and inventories held by distributors. 

Boston Beer estimated depletions and shipments decrease of between 2% and 8% a change from the previous estimate of an increase of between 4% and 10%. 

The revision is reflecting a change in expectations in the Company's Truly hard seltzer business and the launch timing of Hard Mountain Dew. 

Snap Inc plunged 38.95% to $10.05 after the online chat platform reported slowest revenue growth since going public and sharply wider quarterly loss. 

Snap was downgraded by a number of analysts after the weak quarterly results. 

Twitter Inc declined 1.1% to $39.10 after the social media platform operator said second quarter revenues declined 1% to $1.18 billion. 

Net loss in the quarter was $270 million or a loss of 35 cents a diluted share compared to net income of $66 million or 8 cents a diluted share. 

Verizon Communications declined 6.7% to $44.45 after the company said higher prices slowed its phone subscriber growth and lowered its annual outlook.  

 

Eurozone Growth Contracts 

European markets inched higher and the latest private survey estimated economic growth is slowing in the eurozone. 

Private sector contracted for the first time in 15 months on weaker output and new orders, the Purchasing Managers' Index released by S&P Global showed Friday. 

The index for output declined to 49.4 in July from 52.0 in June, the index for service fell to 50.6 from 53.0, and manufacturing dropped to 49.6 from 52.1 in the corresponding months. 

The flash estimate readings will be revised in the second estimate in the next few weeks.  

The survey showed that the factory output decreased sharply and service output growth slowed. 

The ECB also lifted its key lending rate for the first time in 11 years this week, and the rate increase of half-percentage point was larger than expected. 

More worrisome, backlog of orders for both manufacturing and services also declined in the month, a first contraction in eighteen months. 

The DAX index increased 0.3% to 13,284.77, the CAC-40 index gained 0.4% to 6,224.48.62, and the FTSE 100 index inched up 0.14% to 7,280.99. 

For the week, the DAX and the CAC-40 added 2% and the FTSE gained 1.6%. 

Schindler Holding AG declined 3.9% to 175.0 francs after the Swiss elevator and escalator maker cut its 2022 outlook citing China market contraction and Covid-19 related restrictions. 

MTU Aero Engines AG increased 2.2% to 193.15 euros after the German aerospace company won orders worth $600 million of orders at the Farnborough International Airshow. 

 

Asian Markets Rally 

Asian markets generally closed higher and the Nikkei index in Tokyo advanced for the seventh session in a row. 

Kawasaki Kisen soared 11% and Nippon Yusen increased 4.02% after the shipping companies lifted full-year earnings outlook. 

Japan's core consumer inflation, excluding energy and food prices, remained above the Bank of Japan's target rate of 2% for the third month in a row in June. 

A separate report showed Japan's manufacturing slowed to a 10-month low in July on the continued supply chain disruptions and slowing orders. 

The Nikkei index increased 0.4% to 27,914.66, the Hang Seng index rose 0.2% to 20,609.14, and the Sensex index increased 0.7% to 56,072.23. 

For the week, the Nikkei increased more than 4%, the Hang Seng advanced 0.6%, and the Sensex increased 3%. 

China imposed 8 billion yen or $1.2 billion on taxi ride hailing platform Didi Global for cyber securities and data violations.  

The Sensex index in Mumbai advanced for the sixth day in a row on the earnings optimism from banks and rising demand for vehicles and consumer goods.