US stocks end flat though Amazon deal weighs
US stocks mostly edged lower on Friday as Amazon.com’s $13.7 billion deal to buy upscale grocer Whole Foods roiled the retail sector and wounded shares of an array of companies including Wal-Mart and Target. The deal by Amazon, a proven retail disruptor, marked a major step by the internet retailer into the brickand-mortar retail sector.
Wal-Mart shares sank 5 percent, weighing the most on the S&P 500 and the Dow. Shares of Target, CVS Health and Costco fell between 4 percent and 7 percent. “It’s disrupting a number of industries here, and that’s what’s causing the market problems,” said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Sarasota, Florida. Amazon shares gained 3.6 percent, making the stock the biggest boost to the S&P 500. Whole Foods shares surged 30 percent.
The S&P consumer staples sector fell 1.3 percent, by far the worst performing major sector. The S&P 500 food and staples retailing index dropped 4.7 percent. Grocery chain Kroger was the biggest loser on the S&P 500, down 11.3 percent, while Supervalu dropped 12.8 percent. “I would not like to be somebody playing in the grocery space right now,” said Jan Rogers Kniffen, chief executive of retail consultancy firm J Rogers Kniffen WWE in New York.
Moving money
The Dow Jones Industrial Average rose 6.71 points, or 0.03 percent, to 21,366.61, the S&P 500 lost 1.65 points, or 0.07 percent, to 2,430.81 and the Nasdaq Composite dropped 9.45 points, or 0.15 percent, to 6,156.06. The technology sector fell 0.2 percent, continuing its recent slump. Tech has led the S&P 500’s 8.5 percent rally this year, but is on track for its second week of declines, prompting questions over whether investors are moving money into other sectors.
“I think we need to see more of a pullback to say there is a serious rotation going on as opposed to just some profits coming off the top,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. Energy shares rose 1.1 percent, propping up the S&P 500. Oil prices edged up from 2017 lows as some producers cut back on exports.
US homebuilding fell for a third month in May to the lowest in eight months as construction activity declined broadly, while the University of Michigan said its barometer of US consumer sentiment unexpectedly fell in early June. The Japanese yen rose against the dollar, reversing course after sliding to a twoweek low, when the Bank of Japan left its mass money printing program unchanged, maintaining the contrast with the Federal Reserve, which signaled further tightening this week.
The weaker-than-expected US data also weighed on US Treasury yields as it fueled uncertainty about the US rate outlook. Benchmark 10-year Treasuries were last up 2/32 in price to yield 2.155 percent, compared with 2.162 percent late Thursday. “There are some very serious concerns about the Fed tightening right now and about the Fed reducing their balance sheet right now. We’re potentially prompting a recession here,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco. Oil prices staged a modest rebound as some producers reduced exports and US rig additions slowed.
Brent crude futures rose 45 cents to settle at $47.37 per barrel, while US crude settled at $44.74, up 28 cents. Both benchmarks notched a weekly loss exceeding 1.6 percent. —Reuters