Wall Street ends disappointed with the results and bad indicators

The New York Stock Exchange closed lower on Friday, weighed down by some disappointing corporate results and weak indicators, two reminders that the economy is slowing.

• Also read: Snap shares fall 26% on Wall Street

• Also read: Wall Street ends up being pretty happy with the companies’ results

The Dow Jones fell 0.43% to 31,899.29 points, the Nasdaq index fell 1.87% to 11,834.11 points and the broader S&P 500 index fell 0.93% to 3,961.63 points.

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

During the week, “we had Netflix and Tesla, which weren’t as bad as expected, but then we had disappointments on the technical side,” he added.

Snap (-39.08% to $9.96), parent company of the social network Snapchat, took off with a nearly tripled loss and a somber promotional speech.

The small-mind firm took other social networks with it, from Meta (-7.59%) to Pinterest (-13.51%), via the future-listed vehicle of Donald Trump’s platform Truth Social (-3.04%).

Advertising-dependent companies such as Alphabet (-5.81%) or the digital marketing platform The Trade Desk (-7.30%) also suffered.

Twitter also fell short of analyst forecasts (+0.81% to $39.84). The market preferred to maintain the increase in the number of active users, which is seen as encouraging given the context and the dispute with Elon Musk.

So far, “even if the results haven’t been amazing, they’ve been good enough” to support the indices, according to Angelo Kourkafas.

For Merk Investments’ Nick Reece, Snap’s results were a “reminder” of the challenges facing the tech sector, with rising borrowing costs, ongoing supply problems and an economic slowdown.

Accordingly, “concern about the results of Tech Next Week” with Amazon, Apple, Microsoft and Meta weighs “on the market”.

A few other failures include steelmaker Cleveland-Cliffs (-8.87%), whose profit came in below forecasts, or telephone operator Verizon (-6.74%), which revised its targets downward.

In an unfavorable environment for technology and growth stocks, so-called defensive stocks that are less economically vulnerable were favored by investors, whether McDonald’s (+0.21%), Johnson & Johnson (+0.47%) or Procter & Gamble (+ 1.60%).

According to Nick Reece, the market has also been “weighted by macroeconomic indicators”, mainly a series of PMI activity indices, most notably the composite version for the United States. The latter reached its lowest level since June 2020.

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

As a result, operators are seeing the US Federal Reserve (Fed) pause 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 that the peak of inflation is behind us,” said Angelo Kourkafas.

This sentiment explains Friday’s sharp drop in bond yields as investors see the Fed being less aggressive than expected in tightening policy.

The 10-year Treasury yield fell to 2.75% from 2.87% the previous day, its lowest level in nearly two months.

Alongside the outcome of the Fed’s results and meeting, next week Wall Street will follow the first estimate of US gross domestic product (GDP), which could show a contraction in the second quarter.

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

In terms of odds, toymaker Mattel fell (-7.12% to $22.45) despite better-than-expected results. The doll business has taken a downturn, especially Barbies.

American Express was searched (+1.88% to $153.01) after publishing better than expected results, helped by the recovery in tourism but also business travel. The credit card specialist has also raised its growth targets for the year as a whole.

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