It seems the supply chain problem is hitting the advertiser-dependent companies particularly hard and since the tech and communications companies are advertiser dependent, there was a rush out of tech today and back into cyclicals. It is the irony that despite the fact that the consumer has both the cash and desire to buy goods, if the goods cannot be delivered and therefore cannot be purchased, there’s no point in advertising so companies have severely curtailed their ad budgets. As today’s expert put it, “Advertisers are not going to advertise things they can’t sell.”  

But there was good news in that all the indexes notched their third straight week of gains for the first time in nearly four months and the Dow even closed at a new record. S&P Q3 growth is now projected at 34.8%, considerably up from 29% a few weeks ago. It was curious that one expert questioned whether the market’s upward growth could be sustained and would depend on an improving economy rather than earnings since “earnings are backwards-looking.”  Data for months now has demonstrated that the economy is going to get better and that the current difficulties are transitory. So I found this to be a strange comment. But evidently investors are more in line with an improving economy since volume, at long last, is today above the 4-week average at 11 billion. 

Fri  October 22, 2021  6:17 PM

Nasdaq, S&P 500 end lower, dragged down by communications services

By Shreyashi Sanyal and Devik Jain, Sinéad Carew

DJ: 35,603.08  -6.26          NAS: 15,215.70  +94.02        S&P: 4,549.78  +13.59     10/21

DJ: 35,677.02  +73.94       NAS: 15,090.20  -125.50       S&P: 4,544.90  -4.88        10/22

Oct 22 (Reuters) - The S&P 500 and Nasdaq closed lower on Friday as disappointing quarterly reports from Snap Inc (SNAP.N) and Intel Corp (INTC.O) put pressure on the communications and technology sectors and investors turned skittish as Federal Reserve Chair Jerome Powell discussed stimulus tapering.  The Dow managed to end the day with a record closing high for the first time since Aug. 16, but all three indexes had lost ground in morning trading while Powell was speaking but went on to pare losses in a choppy session.  Powell said the U.S. central bank was "on track" to begin reducing its purchases of assets. read more

Sean Sun, portfolio manager at Thornburg Investment Management in Santa Fe, New Mexico said Powell "didn't appear incrementally more hawkish."  But Sun said investors were "really anxious" about weaker than expected earnings at Snap, which attributed some weakness in its advertising business to global supply-chain disruptions and labor shortages that caused brands to pull back on their advertising spending. read more  Snap shares fell more than 25% and its report caused shareholders to exit bigger advertising dependent communications companies such as Facebook Inc (FB.O) and Twitter Inc  (TWTR.N), which both closed down around 5%.  As a result the S&P's communications services index (.SPLRCL) was the biggest drag on the benchmark index.

"Consumers want to open their wallets and buy things but they can't if goods are stuck on container ships. And advertisers aren't going to advertise things they can't sell," said Sun, noting that growth stocks were down in sympathy.  "Investors are now thinking about risk reward and valuations in growth stocks leave less room for disappointment."  Intel shares tumbled almost 12% after the computer chip maker missed third-quarter sales expectations, while its chief executive officer pointed to shortages of chips holding back sales of its flagship processors. read more

The Dow Jones Industrial Average (.DJI) rose 73.94 points, or 0.21%, to 35,677.02, the S&P 500 (.SPX) lost 4.88 points, or 0.11%, to 4,544.9 and the Nasdaq Composite (.IXIC) dropped 125.50 points, or 0.82%, to 15,090.20.  Still, all three indexes notched a third straight week of gains for the first time since early July, with the S&P adding 1.6% for the week while the Dow climbed 1.1% and the Nasdaq advanced by 1.3%.  Among the S&P's major sectors on Friday, consumer discretionary (.SPLRCD) was a drag as Amazon.com Inc (AMZN.O) fell and Intel helped push down the high-profile technology index (.SPLRCT).  The financial sector (.SPSY) was helped, however, by strong gains in American Express Co (AXP.N), which rose 5.4% after it beat profit estimates for the fourth straight quarter. read more

Analysts increased their expectations for S&P 500 earnings growth for the third quarter, forecasting an increase of 34.8% year-on-year, up from an expected 31.9% rise at the beginning of the week, according to data from Refinitiv.  But some investors were already looking beyond the impressive earnings numbers, according to Brad McMillan, chief investment officer for Commonwealth Financial Network, an independent broker-dealer in Waltham, Massachusetts.  "The real question around whether we can push higher is going to be whether economy is going to get better, because the earnings are backwards-looking," McMillan said.  Data showed U.S. business activity accelerated in October, as COVID-19 infections subsided, though labor and raw material shortages held back manufacturing. read more

Advancing issues outnumbered declining ones on the NYSE by a 1.08-to-1 ratio; on Nasdaq, a 1.30-to-1 ratio favored decliners.  The S&P 500 posted 88 new 52-week highs and no new lows; the Nasdaq Composite recorded 142 new highs and 137 new lows.

On U.S. exchanges 11.03 billion shares changed hands compared with the 10.38 billion moving average for the last 20 seconds.