Wall Street ends down, disappointed by results and poor indicators

Wall Street ends down, disappointed with results and poor indicators


The New York Stock Exchange ended lower on Friday, hurt by some disappointing corporate results and poor indicators, two reminders that the economy is decelerating. 

The Dow Jones dropped 0.43% to 31,899.29 points, the Nasdaq index dropped 1.87% to 11,834.11 points and the broader S&P 500 index dropped 0.93% to 3,961 .63 points.

“The market is digesting the results of companies for the week”, explained Angelo Kourkafas, of Edward Jones.

During the week, “we had Netflix and Tesla which were less bad than expected, but then we had disappointments on the Tech side,” he added.

Snap (-39.08% to 9.96 dollars), parent company of the social network Snapchat, thus goes off the road, with a loss almost tripled and a morose speech on publicity.

The firm with the little ghost has taken other social networks with it, from Meta (-7.59%) to Pinterest (-13.51%), via the future listed vehicle of Donald Trump's Truth Social platform ( -3.04%).

By extension, companies also dependent on advertising, such as Alphabet (-5.81%) or the digital marketing platform The Trade Desk (-7.30%) , also suffered.

Although it also missed analysts' forecasts, Twitter was spared (+0.81% to 39.84 dollars). The market preferred to retain the increase in the number of active users, considered encouraging given the context and the dispute with Elon Musk.

So far, “even if the results were not staggering, they were good enough” to support the indices, according to Angelo Kourkafas.

For Nick Reece of Merk Investments, Snap's results were “a reminder” of the difficulties awaiting the technology sector, between rising the cost of credit, persistent supply problems and an economic slowdown.

Therefore, “concern for the results of Tech next week”, with Amazon, Apple, Microsoft and Meta, “weighs on the market”.

Among the few other failures, the steelmaker Cleveland -Cliffs (-8.87%), whose profit came in below forecasts, or the telephone operator Verizon (-6.74%), which revised its objectives downwards.

In an unfavorable environment for technology and growth stocks, so-called defensive stocks, less sensitive to the economic situation, were favored by investors, whether McDonald's (+0.21%), Johnson & Johnson (+0.47%) or Procter & Gamble (+1.60%).

The market was also “weighted by macroeconomic indicators”, according to Nick Reece, mainly a series of PMI activity indices, in particular its composite version for United States. The latter came out at its lowest level since June 2020.

“The talk of the recession is back,” explained the analyst.

As a result, operators see the US Central Bank (Fed) pausing in its rate hike cycle in December, after a 0.75 point hike in July, then two hikes of half a point each in September. and November.

“We are seeing more and more signals showing that the peak of inflation is behind us,” estimated Angelo Kourkafas.

This feeling explains the sharp contraction in bond rates on Friday as investors see the Fed less aggressive than expected in its monetary tightening.

The yield on 10-year government bonds fell to 2.75%, its lowest level in almost two months, from 2.87% the previous day.

In addition to the continuation of the results and the Fed meeting, Wall Street will follow next week's first estimate of US Gross Domestic Product (GDP), which could show a contraction in the second quarter.

A drop would technically enter the United States in recession, after an initial decline in the first quarter.

On the stock market, the toymaker Mattel fell (-7.12% to 22.45 dollars) despite better results than expected. The doll sector saw a slowdown, particularly Barbies.

American Express was sought after (+1.88% to $153.01) after the release of better than expected results, supported by the resumption of tourism, but also business travel. The credit card specialist also raised its growth targets for the full year.