Company / Analytics

Week 29 in Brief

North America

Friday saw the S&P 500 fall nearly 1%, as results from Snapchat led to a downturn in social media shares, but the US index finished 2.6% higher for the week. The Dow rose 2%, while the NASDAQ climbed 3.3% for the week. For the Dow and S&P 500, this marked their biggest weekly gains in four weeks.

Snap. Inc’s shares plunged nearly 40% after Snapchat’s owner posted its weakest-ever quarterly sales growth as a public company. Meta and Alphabet Inc tumbled 7.6% and 5.6% respectively, weighing in heavily on the tech-heavy NASDAQ.

How did the major indices perform?

On Friday:

• The Dow Jones Industrial Average (.DJI) fell 137.61 points, or 0.43%, to 31,899.29,
• The S&P 500 (.SPX) lost 37.32 points, or 0.93%, to 3,961.63
• The NASDAQ Composite (.IXIC) dropped 225.50 points, or 1.87%, to 11,834.11.

For the week:

• The Dow advanced 1.96%,
• The S&P 500 gained 2.56%
• The NASDAQ rose 3.33%.

What drove the U.S. market?

• Snap. Inc’s shares plunged nearly 40% after Snapchat’s owner posted its weakest-ever quarterly sales growth as a public company.
• Twitter fell earlier in the week following a surprise fall in revenue. Advertising revenue rose just 2% to $1.08 billion, missing experts’ expectations of $1.22 billion. In the case of total second-quarter revenue, analysts had predicted $1.32 billion, but twitter reported $1.18 billion.
• Companies that depend heavily on ads also saw their shares tumble heavily. Meta and Alphabet Inc tumbled 7.6% and 5.6% respectively, weighing in heavily on the tech-heavy NASDAQ.
• By Friday, 106 companies in the S&P 500 had reported their earnings. Over 75% of the companies topped Wall Street’s expectations, which is below the 81% beat rate over the previous four quarters.
• Verizon Communications adjusted its profit forecast, citing inflation. This weighed in heavily on the stock, as it tumbled 6.8%.
• Strong earnings and an increased revenue forecast for American Express saw the stock rise 1.9%.

How did the European markets perform?

In Europe, the European Central Bank (ECB) raised its interest rates by 50 basis points on Thursday. Concerns about the rampant inflation led the ECB to announce its first hike in 11 years, outweighing fears of slowing growth as a result of the war in Ukraine.

Despite the news, European equity markets recorded their best week in two months. The pan-European STOXX 600 index (.STOXX) closed 0.3% up at its highest level since June 10, while for the week it jumped nearly 2.9%. Swedish cloud computing firm Sinch recorded the biggest gains, adding 17% in a partial rebound after a five-day losing streak.

Concerns over the supply of energy products eased in the region, as Russian gas flows to Europe resumed after a scheduled maintenance outage, subsequently bringing calm among investors.

How did Asian markets perform?

On Friday, Indian stocks hit a seven-week high, as banks and auto stocks saw massive gains. Investments from foreign funds into equities strengthened.

On Friday:

• The NSE Nifty 50 index rose 0.2% to 16,630
• The S&P BSE Sensex was up 0.17% at 55,740.34.
• Both the indexes hit their highest since June 3 and are now eyeing a near 4% weekly gain.

Bonds and Commodities

• The yield on the 10-Year U.S. Treasury note fell 13 basis points (bps) on Friday, closing the week at 2.78%.
• Oil prices continue to dip as lower domestic demand for gasoline rallied the price lower. West Texas Intermediate (WTI) crude ended Friday’s session just under $95 per barrel.
• Brent crude futures fell 66 cents, or 0.6%, to $103.20.
• On Thursday, The yield on the 10-year benchmark Italian bond rose 22 basis points to 3.69%, widening the premium over its German equivalent to 242 basis points.

Currencies

• The dollar index fell 0.047%, with the euro down 0.18% to $1.021.
• On Friday, The Japanese yen strengthened 0.98% versus the US Dollar at 136.05 per dollar
• Sterling was trading at $1.2002, up 0.08% on the day.

Next week

Several events are poised to affect the financial markets next week. Corporate earnings from Wall Street’s prominent companies are perhaps the most expected in the week.

Earnings from Microsoft and Google are expected on Tuesday, While Facebook’s parent company is expected to announce its second-quarter earnings on Wednesday. Apple and Amazon will follow on Thursday.

Other companies expected to report earnings include Visa, Mastercard, The Coca-Cola Company, McDonald’s, Ford Motor Company, General Electric, Boeing, Southwest Airlines, and ExxonMobil, among many others.