Market Snapshot: Dow, S&P 500 score best week in a month despite Friday’s losses on jitters about earnings by tech giants

Read: Snap’s ‘grim outlook’ sends stock on near-40% skid, slaps other social names

How did stocks trade?

• The Dow Jones Industrial Average
  DJIA,
  -0.43%
  shed 137.61 points, or 0.4%, to end at 31,899.29.

• The S&P 500
  SPX,
  -0.93%
  fell 37.32 points, or 1%, to close at 3,961.63

• The Nasdaq Composite
  COMP,
  -1.87%
  shed 225.50 points, or 1.9%, finishing at 11,834.11.

Major indexes still booked strong weekly gains, with the Dow up 2% and the S&P 500 advancing 2.6%, the best week for both since June 24, according to Dow Jones Market Data. The Nasdaq rose 3.3% for the week.

What drove markets?

Stocks closed lower Friday, after the S&P 500 index briefly broke above 4,000 for the first time since June 9, with shares of technology and communications companies weighing down Wall Street.

“Snap is really weighing hard on technologies, and the like,” said Kent Engelke, chief economic strategist at Capitol Securities Management, by phone.

While earnings expectations have been adjusting to inflation pressures, tighter financial conditions and growing recession fears, “If you miss expectations, you get crushed,” he said.

Read: It’s the end of ‘fantasyland’ for Big Tech and its workers

Disappointing results from Snapchat parent Snap Inc. weighed on the Nasdaq, while the S&P 500’s communications sector slumped 4.3% Friday.

Investors are now focused on next week’s earnings reports for some of the biggest tech names on Wall Street report, including Microsoft
MSFT,
-1.69%,
Meta, Apple
AAPL,
-0.81%
and Amazon
AMZN,
-1.77%,
along with Boeing
BA,
-2.01%,
McDonald’s
MCD,
+0.21%
and Caterpillar
CAT,
-1.31%.

Economic data also remains in the spotlight as more signs of slowing emerge, particularly with the Federal Reserve widely expected to raise its policy rate another 75 basis points next week as it battles high inflation.

See: The Fed could get lucky or things might go wrong. A guide to where the economy might go from here

The S&P Global Market U.S. Flash Composite Purchasing Managers’ Index on Friday showed the biggest contraction in services and manufacturing activity since the start of the pandemic. This comes even as more than two-thirds of the S&P 500 companies who have reported earnings have surpassed Wall Street’s expectations.

See: U.S. July flash PMI data show ‘worrying deterioration‘ in economy

“The preliminary PMI data for July point to a worrying deterioration in the economy,” said Chris Williamson, chief business economist at S&P Global Market Intelligence. “Excluding pandemic lockdown months, output is falling at a rate not seen since 2009.”

But from a purely technical perspective, stocks were likely due for a pullback on Friday anyway, said Kevin Dempter, a technical analyst at Renaissance Macro.

“You’ve had a 10% rally off the lows for the S&P, and a 15% for the Nasdaq. You’re getting to overbought levels, and you’re hitting some levels of resistance,” Dempter said.

The 10-year Treasury yield
TMUBMUSD10Y,
2.758%
fell 12.7 basis points to 2.781%, its lowest yield since May 27, according to Dow Jones Market Data, as investors weigh the odds of a U.S. recession.

Opinion: As Snap melts down, its founders make sure to protect the people who matter: themselves

What companies were in focus?

• Verizon Communications Inc. stock
  VZ,
  -6.74%
  tumbled 6.7% after the telecommunications group cut full-year guidance and missed second-quarter earnings and revenue estimates.

• Schlumberger Ltd.
  SLB,
  +4.28%
  shares rose 4.3% after the oilfield equipment and services group reported better-than-expected results and lifted its outlook.

• Seagate Technology Holdings PLC
  STX,
  -8.11%
  shares lost 8.1% after the data-storage device group’s results and outlook fell short of Wall Street expectations.

• Mattel Inc.
  MAT,
  -7.12%
  fell 7.1% after the toymaker reported a forecast-beating quarterly profit, but a 20% slump in sales of its American Girl business.

• HCA Healthcare Inc.
  HCA,
  +11.43%
  rose 11.4% after a strong earnings report.

How are other assets trading?

• In oil futures, the U.S. crude
  CL.1,
  -1.31%

  CLU22,
  -1.31%
  settled 1.7% lower at $97.57 a barrel.

• Gold
  GC00,
  +0.69%

  GCQ22,
  +0.69%
  rose $14, or 0.8%, to settle at $1,727.40 an ounce.

• Bitcoin
  BTCUSD,
  +0.83%
  turned 2.1% lower at $22,725.

• The Stoxx Europe 600 index
  SXXP,
  +0.31%
  rose 0.3%, booking a 2.9% weekly gain, and its highest closing value in about six weeks, according to Dow Jones Market Data.

—Barbara Kollmeyer contributed to this article