Wall St opens lower as Amazon weighs on tech stocks

NEW YORK, NY - JULY 26: Traders work on the floor of the New York stock Exchange (NYSE) on July 26, 2017 in New York City. The Dow Jones industrial average rose over 90 points as Boeing and other companies posted strong earnings and the Federal Reserve has decided to leave rates unchanged. Spencer Platt/Getty Images/AFP == FOR NEWSPAPERS, INTERNET, TELCOS & TELEVISION USE ONLY ==

NEW YORK: US stock indexes opened lower on Friday as Amazon’s profit miss spooked investors and dragged down shares of other technology companies.

Amazon’s shares were down 4.21% after it reported a 77% drop in profit as its rapid and costly expansion into new shopping categories and countries showed no sign of slowing.

The stock was the biggest drag on the S&P 500 and the Nasdaq. 

The consumer discretionary index, of which Amazon is a component, was the worst performer among the 11 major S&P sectors.

Facebook, Google parent Alphabet and Netflix, part of the high-flying ”FANG” stocks, were also lower.

The tech index was down 0.55%. However, the sector has been the best performer this year, driving the S&P 500’s 10.6% run in 2017.

Risk sentiment also took a hit following the failure of Republicans to repeal Obamacare in a tight Senate vote overnight.

Investors are worried about the ability of President Donald Trump to legislate his pro-growth agenda of tax reform and higher spending on infrastructure.

“It appears that Obamacare has become a nightmare for Trump and not good news for the markets as well,” said Naeem Aslam, chief market analyst at ThinkMarkets.

“The ability of Trump to deliver on his many promises such as tax and stimulus packages are really shattered. This is going to have a negative impact on the markets as the Trump trade would wind up even further.”

At 9:37am ET (1337 GMT), the Dow Jones Industrial Average was down 8.75 points, or 0.04%, at 21,787.8 and the S&P 500 was down 4.64 points, or 0.18%, at 2,470.78.

The Nasdaq Composite was down 32.47 points, or 0.51%, at 6,349.72.

Starbucks fell 7.50%, while Mattel was down 8.78% after their quarterly reports.

Data showed that the US economy accelerated in the second quarter as consumers ramped up spending and businesses invested more on equipment.

Gross domestic product increased at a 2.6 % annual rate in the April-June period, up from 1.2% in the first quarter, the Commerce Department said in its advance estimate.

Exxon was down 1.90% after the world’s largest publicly traded oil producer’s quarterly profit missed estimates.

Intel rose 1.63% after the chipmaker lifted its revenue forecast.

Declining issues outnumbered advancers on the NYSE by 1,363 to 1,120. On the Nasdaq, 1,281 issues fell and 920 advanced. - Reuters