Snap’s Earnings Casts Doubts On Digital Ads

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In his Daily Market Notes report to investors, Louis Navellier wrote:

Snap’s Ad Doubts

Snap numbers cast doubts on digital advertising and the 10-year yield is back to June low.

The market has continued to very successfully climb the wall of worry this week on the strength of generally better earnings results than feared, with overall 3rd & 4th quarter estimates still coming in with 10% y-o-y growth, far from recession numbers.

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Q2 2022 hedge fund letters, conferences and more

Snap (NYSE:SNAP) shares are down 35% today on very disappointing results and no bounce in the outlook due to shrinking ad dollars for digital platformsThis has taken a bite out of the whole sector, hitting Google, Meta, Pinterest, and Twitter.

This morning, Twitter (NYSE:TWTR) also reported misses top and bottom, is not giving guidance, not even having an earnings call, but bounced back to even as it's trading on the pending litigation over Elon Musk's canceled bid for the business.

Verizon (NYSE:VZ) shares are down 6% despite meeting estimates top & bottom, but guiding down on 2nd half prospects, following AT&T which was down hard yesterday.

Strong Consumers

On a positive note, American Express (NYSE:AXP) reported very strong results with Card member spending up 30%, with travel & entertainment spending surpassing pre-pandemic levels.  This is a strong confirmation of the strength of the consumer, at least on the higher income demographic. 

Big Drop

Today, there was a material drop of interest rates with the US 10-year down 13bps to 2.78%, back to June lows, and the 2-year also down 11bps to 2.98%, below where Fed Funds are supposed to be ending the year.

A factor may be the surprisingly weak Services Purchasing Managers Index reported this morning, expected to be flat, and falling a huge 10% and now below 50, indicating shrinking business prospects, for the first time since July '20.

While slowdown indicators abound, the very good week in the markets has been a reminder that stocks are driven primarily by earnings prospects which for now remain attractive.

As long as that holds, we may be back to a "buy the dip" market when recession fears spikes.

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