Sell-off ends brutal April, Amazon shares plunge 14%

TORONTO — Weak results from Amazon soured sentiment as North American stock markets fell to wrap up a dismal April with Canada’s main index posting its fifth consecutive month of declines.

“Today is really about Amazon and the read into corporate earnings and economic growth,” said Anish Chopra, managing director with Portfolio Management Corp.

Amazon reported a rare loss, which caused its shares to plunge 14 per cent as investors were disappointed with its revenue forecast that points to a potential slowdown in consumer spending.

The U.S. technology sector was especially hard-hit as the Nasdaq composite suffered its biggest monthly loss since the 2008 financial crisis. The S&P 500, which includes the so-called large cap FANG stocks — Facebook, Apple, Netflix and Google — ended its weakest month since the start of the pandemic.

The backdrop includes cross-currents with rising interest rates, monetary tightening by central banks, persistent high inflation, COVID-19 spikes in China and the war in Ukraine.

“So I think Amazon has certainly crystallized investor concern around the growth prospects and the earnings prospects of the megacap U.S. tech names,” Chopra said.

Amazon’s quarterly report reversed sentiment from the prior day in response to Facebook parent Meta Platforms beating expectations by posting a healthy profit.

The S&P/TSX composite index closed down 359.06 points or 1.7 per cent to 20,762.00. It lost two per cent for the week and 5.4 per cent in April.

In New York, the Dow Jones industrial average was down 939.18 points at 32,977.21. The S&P 500 index was down 155.57 points at 4,131.93, while the Nasdaq composite was down 536.89 points or 4.2 per cent at 12,334.64.

All 11 major sectors on the TSX were lower, with nine losing at least one per cent.

Industrials was the biggest laggard, falling 2.8 per cent as shares of NFI Group Inc. plunged 15 per cent after the bus manufacturer cut its revenue forecast for the second time in seven months, citing a global shortage of microprocessors.

Real estate dropped 2.7 per cent and technology was 2.5 per cent lower with Hut 8 Mining Corp. off 5.4 per cent and Shopify Inc. 3.3 per cent lower.

The energy sector was weaker as crude oil prices fell slightly but natural gas futures were up more than five per cent. Baytex Energy Corp. shares lost 7.6 per cent while Cenovus Energy Inc. was down 4.4 per cent.

The June crude contract was down 67 cents at US$104.69 per barrel and the June natural gas contract was up 35.6 cents at US$7.24 per mmBTU.

The Canadian dollar traded for 78.17 cents US compared with 77.95 cents US on Thursday. The June gold contract was up US$20.40 at US$1,911.70 an ounce and the July copper contract was down 2.5 cents at US$4.41 a pound.

On the agenda next week are corporate earnings from retailers like Starbucks, U.S. consumer spending, an employment report for April and a Federal Reserve meeting in which interest rates are expected to be hiked, Chopra said.