Stocks fall despite blowout earnings from Amazon, Dow drops 150 points

Stocks fall despite blowout earnings from Amazon, Dow drops 150 points

Traders on the New York Stock Exchange

Source: NYSE

The major averages slipped on Friday as investors pored over a flurry of earnings results and a robust profit beat from e-commerce giant Amazon.

The S&P 500 fell 0.6%, while the Dow Jones Industrial Average shed 150 points. Nasdaq Composite dropped about 0.75%.

Amazon, the last of Wall Street’s mega-cap tech companies to publish results, reported a record first-quarter profit. The Seattle-based firm said profits more than tripled to $8.1 billion and January-to-March sales soared 44% to $108 billion. The results blew past Wall Street expectations with the company earning  $15.79 per share vs. the consensus estimate of $9.54.

Amazon’s results showed demand remained strong for its massive online retail business even as the economy started to open up some. Shares rose more than 1%, but that was not enough to lift sentiment for the whole market.

Twitter, meanwhile, moved in the opposite direction on user growth results and second-quarter revenue guidance that fell short of analysts’ forecasts. The social media platform said monetizable daily active users totaled 199 million during the three months ended March 31 and reported per-share earnings of 16 cents. Twitter plunged 14%.

Apple was coming under some slight pressure in the premarket after the European Union said the company’s App Store was breaching its competition rules. The shares were down 0.7%.

Exxon Mobil and Chevron were both trading lower after reporting before the bell. Chevron shares fell after quarterly EPS failed to exceed expectations.

Friday’s weakness in equities could threaten the major averages’ winning week. The Dow and the Nasdaq are not in the red since Monday. However, the S&P 500 is still in the green for the week, after closing at record levels on Thursday on the heels of blowout earnings results from Apple and Facebook.

 March spending jumped a better-than-expected 4.2%. Personal incomes surged by a massive 21.1% amid more fiscal stimulus.

The PCE price index for March increased 0.5% month-over-month and 2.3% on a year-over-year basis. The core PCE, excluding food and energy, rose 0.4% for March and 1.8% year-over-year. The PCE inflation metric is watched closely by the Federal Reserve and Chairman Jerome Powell warned earlier in the week it may show a transitory increase in prices.

The inflation numbers apparently weren’t as high as feared as the 10-year yield remained flat after the numbers were released.

Fed Chairman Jerome Powell told reporters that the central bank would need to see inflation sustained about 2% “for some time” before it moved to rein in its supportive asset purchases and near-zero interest rates.

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