Â© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York, United States, October 20, 2021. REUTERS / Brendan McDermid
By Shreyashi Sanyal, Devik Jain and SinÃ©ad Carew
(Reuters) – The and Nasdaq closed lower on Friday as disappointing quarterly reports from Snap Inc (NYSE 🙂 and Intel Corp (NASDAQ 🙂 lobbied the communications and tech sectors, and investors got nervous as Federal Reserve Chairman Jerome Powell discussed cutting stimulus measures.
The Dow managed to end the day with a closing record for the first time since August 16, but all three indices lost ground in morning trading as Powell spoke, but continued to cut losses in a choppy session.
Powell said the US central bank was “on track” to start cutting back on asset purchases.
Sean Sun, portfolio manager at Thornburg Investment Management in Santa Fe, New Mexico, said Powell “didn’t seem more hawkish.”
But Sun said investors were “really worried” about Snap’s weaker-than-expected earnings, which attributed some weakness in its advertising business to global supply chain disruptions and labor shortages that have pushed brands to cut ad spending.
Snap’s shares fell more than 25%, and its report prompted shareholders to quit larger advertising-dependent communications companies such as Facebook Inc (NASDAQ 🙂 and Twitter Inc (NYSE :), both of which closed around 5%.
As a result, the S&P Communications Services Index was the main drag on the benchmark.
âConsumers want to open their wallets and buy things, but they can’t if the goods are stuck on container ships. And advertisers aren’t going to advertise things they can’t sell,â he said. Sun said, noting that growth stocks were down out of sympathy. .
“Investors are now thinking about risk / return and growth equity valuations leave less room for disappointment.”
Intel shares fell nearly 12% after the computer chip maker missed third-quarter sales expectations, while its CEO stressed that the chip shortage was holding back sales of its flagship processors.
The index rose 73.94 points, or 0.21%, to 35,677.02, the S&P 500 lost 4.88 points, or 0.11%, to 4,544.9 and fell 125 , 50 points, or 0.82%, at 15,090.20.
Still, all three indexes posted a third straight week of gains for the first time since early July, with the S&P adding 1.6% for the week while the Dow Jones climbed 1.1% and the Nasdaq climbed 1.3. %.
Among the main sectors of the S&P on Friday, consumer discretionary was a drag as Amazon.com Inc (NASDAQ 🙂 fell and Intel helped push the leading tech index down.
The financial sector, however, was helped by strong gains in American Express Co (NYSE :), which rose 5.4% after beating earnings estimates for the fourth consecutive quarter.
Analysts raised their expectations for S&P 500 earnings growth for the third quarter, forecasting a 34.8% year-over-year increase, from an expected increase of 31.9% at the start of the week, data shows by Refinitiv.
But some investors were already looking beyond the impressive earnings figures, according to Brad McMillan, chief investment officer for Commonwealth Financial Network, an independent brokerage in Waltham, Massachusetts.
âThe real question of whether we can push higher will be whether the economy will improve because the profits are looking back,â McMillan said.
Data showed business activity in the United States accelerated in October, as COVID-19 infections declined, although labor and raw material shortages hampered manufacturing.
The advancing issues outnumbered the declining ones on the NYSE by a ratio of 1.08 to 1; on the Nasdaq, a ratio of 1.30 to 1 favored the declines.
The S&P 500 posted 88 new 52-week highs and no new lows; the Nasdaq Composite recorded 142 new highs and 137 new lows.
On the US stock exchanges, 11.03 billion shares changed hands against 10.38 billion moving average in the last 20 seconds.