Stock market indexes fell, erasing early gains as investors shift their focus to next week's expected Fed rate hike. Social media giant Snap and Verizon led the downside after reporting worse-than-expected earnings.
The Nasdaq composite fell 1.5%. The Dow Jones Industrial Average traded 0.2% higher while the S&P 500 fell 0.7%. The small-cap Russell 2000 index fell 1.1%.
Volume was higher on the Nasdaq but lower on the NYSE, as compared to Thursday.
Investors are already focused on next week's expected rate hike from the Federal Reserve. The Fed is expected to slam on the brakes to stem inflation — with another 75-basis-point rate hike on Wednesday — even as the U.S. economy is sucking wind. A Fed-induced recession now seems highly likely.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 31961.78 | -75.12 | -0.23 |
| S&P 500 | (0S&P5) | 3970.05 | -28.90 | -0.72 |
| Nasdaq | (0NDQC ) | 11874.82 | -184.79 | -1.53 |
| Russell 2000 | 180.49 | -1.93 | -1.06 | |
| IBD 50 | 26.97 | -0.49 | -1.78 | |
Last Update: 12:12 PM ET 7/22/2022 |
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As of Friday, 81% of polled economists expect a Fed rate hike of 0.75%, compared with 19% odds of a rate hike of 1%, according to the CME Group's FedWatch tool, which tracks interest rate futures.
The 10-year U.S. Treasury yield slid nine basis points to 2.78% while the price of crude oil climbed to $97 a barrel.
Weak Earnings Hurt Stock Market
Snap reported worse-than-expected earnings after the close Thursday.
Shares plunged roughly 39% after the firm announced it missed top and bottom line Q2 estimates. The company now plans to "substantially slow our rate of hiring, as well as the rate of operating expense growth."
Other social media stocks also fell. Facebook-owner Meta Platforms dropped 7.8%. Pinterest fell 15%.
Twitter also reported second-quarter results early Friday, missing estimates as a weak ad market and the attempted takeover by Elon Musk took a big toll. Twitter stock edged down 0.4%.
American Express staked out an early lead among Dow Jones stocks Friday, after beating Wall Street estimates for its second-quarter results. American Express stock surged 2.7% after the announcement.
The credit card giant reported earnings of $2.57 per share, down 8% from $2.80 per share a year ago. Revenue surged 31% to $13.4 billion, compared to $10.24 billion in 2021. Analysts were expecting an EPS decline to $2.42 on $12.5 billion in revenue.
"We had an outstanding second quarter, with record levels of revenue and Card Member spending, reflecting the strength of our global customer base and continued momentum across our business," said American Express CEO Stephen Squeri.
Market Rally Faces Earnings Wave, Big Fed Rate Hike; What To Do
Verizon Shares Drag Down Telecom Sector
Verizon shares plunged 7% after the wireless services telecom giant reported EPS of $1.31, missing profit expectations by a penny. Revenue slightly beat expectations.
The results dragged down the entire communications sector. The S&P Communications Services Select Sector ETF dropped 1.9%, making it the S&P's worst performing sector on Friday.
Schlumberger beat second quarter earnings estimates and increased its full fiscal year outlook. EPS at the Houston-based driller ballooned 66%. The company's stock rose Friday morning.
"We expect this higher revenue to result in earnings that exceed our previous expectations, given our ambition to exit the year with adjusted EBITDA margins 200 basis points higher than in the fourth quarter of 2021," CEO Olivier Le Peuch said in a news release.
Like many energy sector peers, Schlumberger has dived sharply below the 50-day and 200-day moving average lines. SLB's relative strength line has also fallen off since June 10 but the stock is still up 18% year to date.
Follow Michael Molinski on Twitter @IMmolinski
