Ama­zon pulls stocks mostly lower

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - MAR­KET RE­PORT


NEW YORK — Stock mar­kets around the world sagged on Fri­day af­ter Ama­zon and other big com­pa­nies re­ported quar­terly re­sults that un­der­whelmed in­vestors.

The Stan­dard & Poor’s 500 in­dex fell 3.32 points, or 0.1 per­cent, to 2,472.10 and closed a week packed with cor­po­rate earn­ings re­ports al­most ex­actly where it started.

The Dow Jones in­dus­trial av­er­age rose 33.76 points, or 0.2 per­cent, to 21,830.31 and set an­other all-time high. The Nas­daq com­pos­ite fell 7.51, or 0.1 per­cent, to 6,374.68.

A lit­tle more than half the com­pa­nies in the S&P 500 have now shown how much profit they made dur­ing the spring, and the re­sults have been mostly en­cour­ag­ing. Earn­ings for the in­dex are on pace to be about 9 per­cent higher than a year ear­lier, ac­cord­ing to Fac­tSet. But ex­pec­ta­tions were high com­ing into the re­port­ing sea­son, and the few com­pa­nies that have fallen short of fore­casts have seen their stock prices pun­ished.

Ama­zon shares fell $25.96, or 2.5 per­cent, to $1,020.04 af­ter its sec­ond-quar­ter profit missed ex­pec­ta­tions. Its fore­cast for op­er­at­ing in­come this fis­cal year was also be­low many an­a­lysts’ fore­casts, though rev­enue for the lat­est quar­ter beat ex­pec­ta­tions.

Earn­ings re­ports were the main fo­cus for mar­kets dur­ing a busy week, when the Fed­eral Re­serve also de­cided on Wed­nes­day to hold in­ter­est rates steady and the govern­ment on Fri­day gave an up­date on the econ­omy’s health.

The econ­omy grew at an an­nual rate of 2.6 per­cent in the sec­ond quar­ter, revved up by a rise in con­sumer spend­ing, the Com­merce Depart­ment re­ported. Last quar­ter’s growth rate was more than dou­ble that of the year’s first quar­ter, which was re­vised down to 1.2 per­cent. The faster growth, though, was still a shade be­low the 2.7 per­cent that economists ex­pected.

“Over­all, the econ­omy con­tin­ues to move along, but it’s hard to see where the fuel is go­ing to come from for fur­ther ac­cel­er­a­tion,” said Rich Weiss, chief in­vest­ment of­fi­cer of mul­ti­as­set strate­gies at Amer­i­can Cen­tury Investments. He says the econ­omy re­minds him of what golfers call a “son-in-law” shot, one that’s not bad but not great.

“We’re not throw­ing new money into the stock mar­ket at this point,” Weiss said. In­stead of U.S. stocks, he prefers for­eign mar­kets where he says economies have more po­ten­tial for im­prove­ment. Many other in­vestors have shifted their money us­ing a sim­i­lar phi­los­o­phy, and the fall­ing value of the dol­lar against other cur­ren­cies has helped for­eign stocks’ re­turns.

To­bacco stocks were some of Fri­day’s worst per­form­ers af­ter the U.S. govern­ment said it’s con­sid­er­ing lim­it­ing the amount of nico­tine in cig­a­rettes. Al­tria Group, which sells Marl­boro and other cig­a­rettes in the U.S., fell $7.02, or 9.5 per­cent to $66.94. It had been down as much as 18.9 per­cent shortly af­ter the Food and Drug Ad­min­is­tra­tion’s an­nounce­ment.

The yield on the 10-year Trea­sury note fell to 2.28 per­cent from 2.32 per­cent late Thurs­day. The two-year yield dipped to 1.34 per­cent from 1.36 per­cent, and the 30-year yield dropped to 2.90 per­cent from 2.93 per­cent.

Brent crude oil, the in­ter­na­tional stan­dard, rose $1.03 to $53.53 a barrel Fri­day.

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