Stocks fell Friday, as Tech stocks broke their three day wining streak to lead the way down.
The S&P 500 dropped 0.9%, the Dow was down 0.4%, and the Nasdaq dropped 1.9%, after Snap (SNAP) issued a disquieting fourth quarter earnings report that weighed down the entire sector, as the company’s stock plummeted 39%.
All three indexes were up for the week at the close however.
Snap’s revenues were only slightly shy of estimates, but the company’s quarterly letter to shareholders contained troubling commentary on the overall ad market indicating strong headwinds were forthcoming. That combined with the fact it did not offer any formal guidance to investors spooked the market. It also said third quarter revenue growth was tracking flat over the prior year.
In the letter, Snap said, “Platform policy changes have upended more than a decade of advertising industry standards, and macroeconomic challenges have disrupted many of the industry segments that have been most critical to the growing demand for our advertising solutions. We are also seeing increasing competition for advertising dollars that are now growing more slowly.”
“Increasing competition” has been taken to mean TikTok is continuing to dominate its peers in the social media sector.
Shares of Meta Platforms (META) also fell, by more than 7%. Meta will offer its earnings report for the second quarter next Wednesday after the market’s close.
Bloomberg data showed Snap’s fall peeled at least $76 billion of market value from stocks which gain revenue from digital advertising, as Alphabet (GOOG) and Pinterest (PINS) also dropped.
In other earnings news, Verizon (VZ) dropped more than 6% after a disappointing quarterly earnings report.
The earnings report from American Express (AXP) was a bright point, with CEO Stephen Squeri saying he sees no signs of a recession from his company’s business. The report raised the full year revenue outlook, as shares rose 2%.
Twitter’s earnings also missed expectations, as revenue growth sagged and the company reported a loss against expectations for a moderate per-share profit. The company blamed the results on “advertising industry headwinds associated with the macro environment as well as uncertainty related to the pending acquisition of Twitter by an affiliate of Elon Musk.” Twitter gained 1% at the close.
The euro held at about1.02 against the dollar, as the ECB issued a decision Thursday to raise interest rates for the first time in 11 years. Investors also took note of an EU plan to ration energy earlier in the week, as well as the drama surrounding the reopening of the Nord Stream pipeline, and Canada’s release of the crucial turbine Russia needs to increase flows of gas to Europe.
Crude oil dropped again on Friday, almost 2%, as WTI continued to trade below $100 per barrel. Investors were factoring in the decline in gas, which has now fallen for 37 straight days to $4.41.
