Stocks drop as earnings season approaches

Markets / July 12, 2022 / DRPhillF / 0

US stocks fell sharply on Monday to start the week, driven by losses in technology stocks as investors prepare to start earnings season and fresh inflation data due for release on Wednesday.

The Nasdaq Composite Index is down 2.3%, and the S&P 500 Index is down 1.2%. The Dow Jones Industrial Average was down 160 points, or 0.5%. Monday’s moves come after a bullish week for stocks that saw all three benchmarks post weekly gains despite closing flat after Friday’s jobs report.

Meanwhile, the euro fell closer to parity with the US dollar. The currency fell 1.4% to $1.0044, hitting its lowest level in two decades as investors considered the possibility of an energy crisis pushing the European economy into recession.

Twitter (TWTR) was in focus Monday after Elon Musk backtracked on his $44 billion bid for the social media platform late last week. Musk cited “substantial” violations of several provisions of the agreement in his decision to terminate the deal, including Twitter’s recent decision to fire some of its recruiting team and not provide Musk with what he deems to be accurate on “bots” or fakes. accounts. Shares closed 11.3% lower at $32.65 a piece.

“It’s not about robots. This is Musk’s team showing a lower price,” Brian Fitzgerald, chief equity analyst at Wells Fargo, told Yahoo Finance Live on Friday.

A regulatory filing showed that Elon Musk halted his deal to buy Twitter on July 8, 2022, accusing the company of “misleading” data about the number of fake accounts. (Photo by Chris Delmas/AFP via Getty Images)

Meanwhile, oil prices fell on Monday as renewed fears of the coronavirus in China fueled supply concerns. West Texas Intermediate (WTI) crude futures fell nearly $1, or 1%, to $103.70, partially reversing Friday’s 2% gain. Brent crude was also down about 0.3% to $106.71 a barrel.

Investors are awaiting a batch of quarterly results this week as major companies begin a new earnings season.

Senior reporters JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) are among the major banks set to announce results, along with PepsiCo (PEP) and Delta Air Lines (DAL).

Wall Street trimmed its second-quarter earnings per share estimate for the S&P 500 by 1.1% between March 31 and June 30, according to recent data from FactSet.

Although the benchmark’s 4.1% annualized earnings growth rate for the second quarter would mark the slowest since the end of 2020, the decline by analysts is less than what is typically seen ahead of earnings season.

Later this week, investors will get the latest gauge of how quickly consumer prices are rising across the US economy when the Bureau of Labor Statistics releases its Consumer Price Index (CPI) for June on Wednesday. Economists polled by Bloomberg expect overall inflation to rise 8.8% last month, an increase that would be the highest since December 1981 and the highest reading for the current inflation cycle.

“We expect a new spike in inflation,” Matthew Luzzetti, chief US economist at Deutsche Bank, told Yahoo Finance Live on Mnday. “For a market that has definitely been dealing with recession fears, I think this week there will be renewed concerns about higher inflation.”

moves:

Twitter (TWTR) Shares fell 11.3 percent to close at $32.65 after Elon Musk backed away from his $44 billion offer to the social media platform on Friday. Musk cited “substantial” violations of several provisions of the agreement in his decision to terminate the deal, including Twitter’s recent decision to fire some of its recruiting team and not provide Musk with what he deems to be accurate on “bots” or fakes. accounts.
identification platforms (dead) It fell 4.7% to $162.88 after Needham & Company’s Laura Martin downgraded to Underperform from Hold, recommending investors to stay on the sidelines as the social media giant assesses “several structural valuation risks,” including shifts in consumer behavior, Competition, trench degradation, regulatory risks and the risk of investing in the Metaverse.
Uber (Uber) The stock fell 5.1% to $21.21 a share after reports that the air carrier tried to pressure politicians, including French President Emmanuel Macron, and defied some laws in an attempt to expand its operations globally from 2013 to 2017. The so-called “Uber files” The Guardian and France’s Le Monde newspaper reported that it was based on more than 124,000 documents leaked to the outlets revealing “ethically questionable practices” that led to the company’s rise under co-founder Travis Kalanick.
American Airlines (AAL) Shares slipped 3.9% alongside declines in other airline stocks amid fears of a resurgence of COVID in China.
Duolingo (by) Down 14.3% after KeyBanc analyst Justin Patterson’s stock rating downgraded to Outperform’s weight segment “due to headwinds from inflation and signs of softness in other freemium apps” – a business model in which consumers pay nothing to download an app but are offered optional in-app purchases For premium features.
match group (MTCH) Shares fell 6.7% after analysts at KeyBanc Capital Markets cut the company’s price target to $90 from $125, citing expectations that the dating app could come under pressure in a recessionary environment. However, the company reiterated its over-rating of the stock.