Global stock markets ended the week on a mixed note on Friday, with Wall Street dragged lower by disappointing results from tech companies and weak economic data, adding to fears of a recession.
US stocks ended a three-day winning streak, with the Dow Jones Industrial Average falling 0.4% and the S&P 500 losing 0.9%. The Nasdaq Composite fell 1.9%.
Earnings from Snap, the owner of messaging app Snapchat, were like a bombshell, with quarterly losses nearly tripling to $422 million despite a 13% revenue surge in “more difficult” than expected. Its shares fell nearly 40%.
The results also weighed on Facebook parent Meta Platforms, which fell 7.6%, and Google parent Alphabet, which lost 5.8% on concerns over internet advertising.
“Even though the results aren’t great, they’ve been pretty good,” said Angelo Kourkafas, investment strategist at Edward Jones.
“What helped markets rebound off of pretty good earnings was lower inflation expectations.”
With 106 of the S&P 500 companies reporting earnings through Friday morning, 75.5% beat analysts’ expectations, below the 81% beat rate over the past four quarters, according to Refinitiv data.
European equities returned to positive territory. As markets closed on Friday, London’s FTSE 100 and Frankfurt’s DAX edged up 0.1%, while Paris’ CAC 40 rose 0.3%.
The euro came under pressure after a key survey suggested the single currency area could be on the brink of recession due to collapsing demand and rising costs.
A bigger-than-expected interest rate hike by the European Central Bank failed to provide a lasting boost to the euro, as political unrest in Italy also clouded the outlook.
Economic activity in the euro zone fell in July, the closely watched Purchasing Managers’ Index, or PMI, showed, with a sharp drop in manufacturing and post-lockdown consumer spending held back by high prices .
“The eurozone is on the brink of recession,” said Andrew Kenningham, economist at Capital Economics. “The ECB will need to follow up on yesterday’s historic rate hike with several more in the coming months, even if it will deepen the recession.”
Nevertheless, Paris, Frankfurt and London all rose slightly.
Earlier in Asia, Tokyo’s Nikkei 225 closed 0.4% higher, while Hong Kong’s Hang Seng Index climbed 0.2%. The Shanghai Composite fell 0.1%.
The dollar was on course for its biggest weekly percentage decline in nearly two months, after hitting a 20-year high last week.
The Japanese yen strengthened around 1% against the greenback at 136.05 to the dollar, while the pound last traded at $1.2002, up 0.08% on the day.
This week’s rally in New York has fueled hopes that the market may be on the verge of a rally after a bruising first half of 2022.
But Chris Beauchamp, chief market analyst at online trading platform IG, said that if this week’s rally in stocks lasted longer than previous ones, it was on borrowed time.
Investors “will be hesitant to push their luck too hard next week, given the avalanche of earnings brewing, plus a [US Federal Reserve interest rate] decision and first reading on second-quarter U.S. GDP.
Oil prices ended the week lower on Friday, with Brent, the benchmark for two-thirds of global oil, down 0.6% at $103.20 a barrel, and West Texas Intermediate, the gauge that follows US Crude, down 1.7% to $94.70. a barrel.
Updated: July 23, 2022, 08:05