{"id":39553,"date":"2023-07-23T21:21:45","date_gmt":"2023-07-24T01:21:45","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/tech-stocks-look-strong-but-heres-a-sign-the-sector-is-actually-under-a-lot-of-stress\/"},"modified":"2023-07-23T21:21:48","modified_gmt":"2023-07-24T01:21:48","slug":"tech-stocks-look-strong-but-heres-a-sign-the-sector-is-actually-under-a-lot-of-stress","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=39553","title":{"rendered":"Tech stocks look strong, but here\u2019s a sign the sector is actually under a lot of stress"},"content":{"rendered":"
\n

Contrary to what Wall Street is saying, another advertising and marketing agency confirmed that the technology sector appears to be having a lot of trouble when it comes to discretionary spending on advertising and marketing.<\/p>\n

Shares of Interpublic Group of Companies Inc.
\n IPG,
\n -13.32%<\/bg-quote>
\n plunged 13.3% to close at $32.87 on Friday, enough to lead the S&P 500 index\u2019s
\n SPX,
\n +0.03%<\/bg-quote>
\n losers, after the company missed second-quarter revenue expectations and cut its full-year growth outlook in half, citing weakness in the technology sector. The stock suffered the biggest one-day selloff since it tumbled 15.3% on March 12, 2020.<\/p>\n

\n

That comes just two days after fellow ad agency Omnicom Group Inc.\u2019s stock
\n OMC,
\n -4.94%<\/bg-quote>
\n tumbled 10.4% to pace the S&P 500\u2019s decliners, after also missing on revenue and providing a somewhat downbeat outlook, amid a \u201cpause\u201d in tech-sector spending as clients have become \u201cmore cautious.\u201d<\/p>\n

And the companies also said they saw softness from tech-sector clients in their first-quarter reports.<\/p>\n

That might seem counterintuitive to investors, given that the technology sector has been the S&P 500\u2019s strongest this year. The Technology Select Sector SPDR exchange-traded fund
\n XLK,
\n -0.05%<\/bg-quote>
\n has soared 41.5% year to date, while the S&P 500 index
\n SPX,
\n +0.03%<\/bg-quote>
\n has advanced 18.2%.<\/p>\n

Interpublic Chief Executive Philippe Krakowsky said Friday on a post-earnings call with analysts that the tech sector is moving through a \u201cchallenging period\u201d that has included significant cost and workforce cuts.<\/p>\n

\u201c[W]hat we have seen is that the sector is under a lot of stress,\u201d Krakowsky said, according to an AlphaSense transcript.<\/p>\n

He said the pressure Interpublic has seen in sector isn\u2019t from smaller tech companies, or those backed by venture capitalists, but a \u201crelatively small group of large companies.\u201d<\/p>\n

And given a \u201cmodestly more uncertain\u201d macroeconomic environment, Krakowsky said it\u2019s clear that pressure on the tech sector \u201cis not abating.\u201d<\/p>\n

\u201c[I] don\u2019t think that we\u2019re going to be able to call the turn,\u201d Krakowsky said. While he\u2019s confident the tech sector will eventually bottom, \u201cit\u2019s just they\u2019re clearly going through something that is more protracted than any of us thought.\u201d<\/p>\n

Interpublic reported before Friday\u2019s open second-quarter net income that rose to $265.5 million, or 68 cents a share, from $229.6 million, or 58 cents a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share of 74 cents beat the FactSet consensus of 61 cents.<\/p>\n

Revenue fell 2.5% to $2.67 billion, below the FactSet consensus of $2.39 billion.<\/p>\n

For 2023, the company cut its organic growth guidance range to 1% to 2% from 2% to 4%.<\/p>\n

Wells Fargo analyst Steven Cahall said that the disappointing earnings reports from the two companies this week are a worrying sign of \u201cgathering clouds\u201d for ad agencies, with risks of a \u201cderating\u201d of the stocks on the horizon.<\/p>\n

\u201cIt doesn\u2019t feel like a soft landing,\u201d Cahall wrote in a note to clients.<\/p>\n

Interpublic\u2019s stock has lost 1.3% year to date and Omnicom shares have tacked on 2.8%, while the S&P 500 has gained 18.2%.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Contrary to what Wall Street is saying, another advertising and marketing agency confirmed that the technology sector appears to be having a lot of trouble when it comes to discretionary spending on advertising and marketing. Shares of Interpublic Group of Companies Inc. IPG, -13.32% plunged 13.3% to close at $32.87 on Friday, enough to lead […]<\/p>\n","protected":false},"author":1,"featured_media":39554,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-39553","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nTech stocks look strong, but here\u2019s a sign the sector is actually under a lot of stress | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Contrary to what Wall Street is saying, another advertising and marketing agency confirmed that the technology sector appears to be having a lot of\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=39553\" \/>\n<meta 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