Stocks Slide on Weakness in Social Media and Tech Stocks

What you need to know…

The S&P 500 Index ($SPX) (SPY) on Friday closed down -0.93%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.43%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.77%. 

U.S. stock indexes Friday settled moderately lower.  The S&P 500, Nasdaq 100, and the Dow Jones Industrials all retreated from 6-week highs and closed lower.  Weakness in social media stocks Friday weighed on the overall market as Snap plunged -39% after reporting disappointing earnings results.  Also, technology stocks were under pressure Friday, with Seagate Technology Holdings Plc, the world’s biggest maker of computer hard drivers, closing down more than -8% after giving a weak forecast for the current pricing period citing “weakening global economic conditions.”

Stock indexes Friday morning initially moved higher as healthcare stocks rallied on better-than-expected quarterly earnings results from HCA Healthcare and Tenet Healthcare.  Also, American Express closed up more than +1% Friday to lead gainers in the Dow Jones Industrials after reporting record revenue for Q2 and raising its full-year revenue forecast.  In addition, a slide in T-note yields Friday supported stocks after the 10-year T-note yield dropped to an 8-week low of 2.729%. 

Friday’s U.S. economic data was slightly supportive for stocks after the July U.S. S&P Global manufacturing PMI fell -0.4 to a 2-year low of 52.3.  However, that was stronger than expectations of 52.0.

Today’s stock movers…

Social-media stocks sold off Friday today, as Snap (SNAP) closed down -39% after reporting Q2 revenue of $1.11 billion, slightly weaker than the consensus of $1.14 billion. Also, Pinterest (PINS) closed down by more than -13%, and Meta Platforms (META) closed down by more than -7%.  Alphabet (GOOGL) closed down by more than -5%. 

SVB Financial Group (SIVB) closed down more than -17% Friday to lead losers in the S&P 500 after reporting Q2 EPS of $5.60, well below the consensus of $7.72, and forecast full-year net interest margin of 2.15% to 2.25%, below the consensus of 2.34%.

Verizon Communications (VZ) closed down more than -6% Friday to lead losers in the Dow Jones Industrials after reporting Q2 adjusted EPS of $1.31, below the consensus of $1.33, and lowering its full-year adjusted EPS estimate to $5.10-$5.25 from a prior estimate of $5.40-$5.55. 

Seagate Technology Holdings Plc (STX) closed down by more than -8% Friday after reporting Q4 revenue of $2.63 billion, below the consensus of $2.80 billion, and forecast Q1 revenue o $2.50 billion, weaker than the consensus of $3.01 billion.  Also, Western Digital (WDC) closed down by more than -6%, and Micron Technology (MU) closed down by more than -3% on the news.

Capital One Financial (COF) closed down by more than -4% Friday after reporting Q2 adjusted EPS of $4.96, weaker than the consensus of $5.10. 

Healthcare stocks rallied Friday, with HCA Healthcare (HCA) closing up more than +11% to lead gainers in the S&P 500 after reporting Q2 adjusted Ebitda of $3.04 billion, stronger than the consensus of $2.81 billion.  Also, Tenet Healthcare (THC) closed up more than +6% after reporting Q2 adjusted Ebitda of $843 million, well above the consensus of $729 million, and sees full-year adjusted Ebitda of $3.38-$3.58 million, stronger than the consensus of $3.38 billion.  In addition, Universal Health Services (UHS) and Cardinal Health (CAH) closed up more than +1%

American Express (AXP) closed up more than 1% Friday to lead gainers in the Dow Jones Industrials after reporting Q2 revenue of $13.40 billion, well above the consensus of $12.51 billion, and raised its full-year revenue forecast to +23%-25% from a prior view of +18%-20%.

Schlumberger (SLB) closed up more than +4% Friday after reporting Q2 revenue of $6.77 billion, above the consensus of $6.28 billion, and forecasting full-year revenue of at least $27 billion, better than the consensus of $26.21 billion.

PPG Industries (PPG) closed up more than +3% Friday after reporting Q2 adjusted EPS of $1,81, above the consensus of $1.75.

Across the markets…

Sep 10-year T-notes (ZNU22) on Friday closed up +31.5 ticks, and the 10-year T-note yield fell -10.5 bp to 2.770%.  Sep T-notes Friday climbed to a 2-week high, and the 10-year T-note yield fell to an 8-week low of 2.729%.  A rally in European government bonds Friday provided carry-over support to T-notes as the 10-year German bund yield dropped to a 7-week low of 0.986% and the 10-year UK gilt yield fell to an 8-week low of 1.900%.  T-notes extended their gains Friday after stocks tumbled, which sparked safe-haven demand for T-notes.   

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