U.S. Stocks Turn Lower as Economy Falters

Barry Adams
28 Jul, 2022
New York City

Stocks on Wall Street rested after the U.S. economy shrank for the second quarter in a row. 

Seasonally adjusted GDP declined at a slower pace of 0.9% in the second quarter following the 1.6% fall in the first quarter, the Bureau of Economic Analysis reported Thursday. 

Weak private investments and lower investment in inventories and falling government spending drove the pace of the decline. 

Higher exports helped but the falling real personal expenditure also dragged the economic activities in the quarter. 

On Wall Street most investors regard two consecutive quarterly economic growth declines as the start of the recession.

The National Bureau of Economic Research's view on the economy is widely accepted as the final assessment of the health of the economy and the organization's views are generally released months later. 

Initial jobless claims totaled 256,000 for the week ended July 23, a fall of 5,000 from the upwardly revised data for the previous week, according to the report released by the Labor Department. 

The S&P 500 index declined 0.4% to 4,009.74 and the Nasdaq Composite index dropped 0.6% to 11,961.26. 

Futures of crude oil price increased 54 cents to $97.80 a barrel and natural gas was nearly unchanged at $8.55 a thermal unit. 

Stocks edged lower after benchmark indexes soared more than 2% in the previous session following the 0.75 percentage point rate hike by the Federal Reserve. 

Spirit Airlines rose 3.8% to $25.22 after the discount carrier canceled its merger plan with Frontier Group and agreed to be acquired by JetBlue after protracted negotiations. 

The proposed $3.8 billion merger, which still requires a clearance by the U.S. Department of Justice, will create the fifth-largest U.S. airline after a fierce battle between Frontier and JetBlue. 

Frontier Group soared 8.9% to $12.26 and JetBlue declined 2.7% to $8.17. 

Southwest Airlines declined 8.7% to $37.20 after the discount carrier guided a challenging business environment and predicted higher operating costs. 

The company also reported total operating revenues increased 67.8% to $6.7 billion and net income soared 118% to $760 million from a year ago. 

Diluted earnings per share rose to $1.20 from 57 cents a year ago. 

Stanley Black & Decker, Inc plunged 12.4% to $102.81 after the toolmaker lowered its full-year outlook and said the demand softened towards the end of the quarter. 

Metal Platforms, Inc declined 7.9% to $156.12 after the parent of Facebook and Instagram said June quarter revenues declined 1% to $28.8 billion on digital advertising slowdown. 

Net income in the period fell 36% to $6.7 billion from $10.4 billion a year ago. 

Diluted earnings per share fell 32% to $2.46 from $3.61 a year ago.  

Teladoc Health Inc plunged 23.5% to $33.01 after the online healthcare platform provider said June quarter revenues rose 18% to $592 million. 

Net income plunged to $3.1 billion from $133.8 million a year ago after the company took a one-time goodwill charge of $3 billion and increased total charge in the six-month period to $9.6 billion.  

Average revenue per U.S. paid member increased to $2.60 in the second quarter from $2.31 a year ago.