Communications stocks rally for a week even as Snap suffers

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Communications stocks rallied during the week, buoyed at the end by a broader stock market which had its first winning week in nearly two months – but the sector followed the broader technology market, as midweek injury to Internet stocks dragged.

The communications services sector (XLC) SPDR fund was up 3.8% for the period, which would look solid were it not for an S&P 500 which marked its best week since November 2020, gaining around 6.6%.

In a week you’d be hard-pressed to find a large-cap communications stock that fell – only six of those names ended up worse off than a week ago – the clear outlier was Snap (NYSE: SNAP), which fell on Tuesday (and appeared to take the rest of the stock market with it) after Monday night’s warning that deteriorating macro conditions meant it would miss its second-quarter guidance.

The stock dipped 43.1% that day, and even gains of 11%, 5% and 5% the rest of the week could not mitigate a 33% drop for the whole week.

Snap’s warning weighed on social media peers like Meta Platforms, Alphabet and Twitter, though those stocks rallied; the one that hasn’t been Pinterest (NYSE: PINS), the second-worst large-cap coms decline of the week, down 10.7% over this period.

The winning side was more populated, and the best large-cap player was Lumen Technologies (NYSE: LUMN), up 13% for the week. Lumen put it together a bit in May; it is up more than 24% for the month, and now well above its 52-week low in February.

Baidu (NASDAQ: BIDU) gained 11.8% for the week, capping gains with strong revenue driven by its non-advertising revenue such as Baidu AI Cloud.

The top five gainers over the past five sessions among large-cap and larger communications services stocks (market cap $10 billion or more):

  • Lumen Technologies (LUMN), +13%;
  • Baidu (BIDU), +11.8%;
  • Liberty Global Class A (LBTYA), +9%;
  • Endeavor Group Holdings (EDR), +8.9%;
  • Vodafone (VOD), +8.5%.

The top five declines over the past five sessions among large-cap and larger communications services stocks (market cap $10 billion or more):

  • Snap (SNAP), -33%;
  • Pinterest (PINS), -10.7%;
  • WPP (WPP), -2.8%;
  • Liberty Braves Group Series A (BATRA), -1.3%;
  • News Corp Class B (NWS), -0.2%.

Garland K. Long