NEW YORK, July 31 — US stocks dropped yesterday to pull further from record highs as an underwhelming earnings report from Amazon.com Inc dampened the market mood, while the dollar bounced from its lows but still suffered its worst week in nearly two months.
After making record profits during the pandemic, Amazon said late on Thursday that its sales growth would slow in the next few quarters as people ventured outside their homes post-pandemic and reduced online shopping.
Investors sold Amazon stock as the online retailer revenue of US$113 billion in the second quarter was US$2 billion shy of analysts’ forecasts.
Amazon shares slumped 7.6 per cent, dragging the tech-focused Nasdaq Composite down 0.7 per cent. That fed profit-taking elsewhere, with the S&P 500 losing 0.5 per cent. The Dow Jones Industrial Average shed 0.4 per cent. Both the S&P 500 and the Dow struck record highs on Thursday.
“Amazon’s weak report and the impact on futures immediately made its impact felt on global markets,” said Paul Hickey, co-founder of Bespoke Investment Group, LLC.
But Hickey also said: “Just because investors haven’t reacted to the company’s recent reports with excitement doesn’t mean Amazon has been a poor performer,” adding that the shares have climbed 17 per cent in the past year.
Still, Amazon’s warning of slowing growth gave investors a reason to cash in profits.
The pan-European STOXX 600 index lost 0.45 per cent and MSCI’s gauge of stocks across the world shed 0.74 per cent.
Treasury yields edged lower as investors shied away from higher-risk investments. Data released yesterday showed annual inflation accelerating further above the Federal Reserve’s 2 per cent target, but that did not appear to alter investors’ bets that the Fed is in no hurry to tighten monetary policy.
Benchmark 10-year Treasury yields retreated to 1.2289 per cent, from 1.269 per cent late on Thursday. The yield on the 2-year note fell to 0.1898 per cent, from 0.201 per cent.
Currency investors took a slightly different view, betting yesterday that the Fed might not be as dovish as some think.
The dollar, which hit a one-month low on Thursday, bounced following remarks by St. Louis Federal Reserve President James Bullard that the Fed should start reducing its monthly bond purchases this fall.
The dollar index rose 0.275 per cent, and a firmer greenback pushed the euro down 0.23 per cent to US$1.1859.
For the week, however, the dollar was still down 0.8 per cent against a basket of six major currencies, making this its worst week since May 9.
Oil prices kept their march higher, as investors bet that vaccinations would alleviate the impact of a resurgence in Covid-19 infections across the globe and keep demand growing faster than supply.
US crude recently rose 0.18 per cent to US$73.75 per barrel and Brent was at US$76.33, up 0.37 per cent on the day.
Gold prices, which rose this week on hopes that bullion would be a good hedge against inflation given a dovish Fed, succumbed to slight profit-taking yesterday. A firmer dollar also weighed on the precious metal.
Spot gold dropped 0.8 per cent to US$1,813.26 an ounce. US gold futures fell 1.01 per cent to US$1,812.70 an ounce. — Reuters
