Amazon and Starbuck shares deflated after delivering disappointing Q2 results puncturing recent feel-good highs on tech-heavy Nasdaq. The Nasdaq composite slid -0.12% and the S&P 500 dropped -0.08% recovering some of their earlier losses. Tech sell-off is still viewed by market commentators as investors unwinding positions in normal market moves rather than a prelude to a fall.
The Dow however had a sturdy run closing in record territory up +0.15%. Renewable energy equipment up +7.05%, insurance brokers up +1.88% defense +1.22% and gold mining up 1.52% were among the leading industries. While lagging industries included tires down -8.17% after Goodyear (-8.37%) cut its profit outlook. Tobacco fell -3.97% after the FDA said it wanted to cut nicotine in cigarettes and restaurants & bars also dropped -3.12%.
In economic news, the Commerce Department released its estimate of GDP for second quarter as growing at an annual rate of 2.6% and it revised the first quarter GDP downward to 1.2%.
The dollar ended the week where it began lower against major currencies, propelled by the Federal Reserve policy announcement to keep rates steady and to begin to normalisation of its balance sheet soon. It just wasn't enough to alleviate investor anxiety as to whether there will be another rate hike on the cards this year. The market awaits positive data for the dollar to recover. Oil continues to rise as brent crude is now at $52 a barrel at market close.
- Dow 21,830 +0.15%
- S&P 500 2,473 -0.08%
- Nasdaq 6,374 -0.12%
- Russell 2000 1,429 -0.30%
- NYSE Composite 11,954 -0.07%
- Gold 1,275 +0.73%
- Oil WTI $52 +2.08%
- 10-Year Treasury Yield 2.28% +0.03%
ArcBest shows freight on move, Amazon didn't quite deliver
Top gainer today was Redfin, a real estate company mixing online technology and traditional agents, debut on Nasdaq and opened 35% above its IPO price of $15 and closed up +44%. Freight transportation company, ArcBest, soared +25% after announcing upbeat second quarter earnings. CEO, Judy McReynolds noted that "favorable trends in economic indicators are expected to positively impact the freight environment going forward."
Amazon closed down -2.74% after its second quarter earnings fell far short of analysts' expectations. Earnings were 40 cents a share against the consensus of $1.41 per share and there was a 77% plunge in profit.
Higher spending in operating expenses due to spending on original TV shows and movies and as a result of buildout expenses ahead of the holiday season among other things. Revenues were up 6.3% from last quarter to $38 bn which was better than expected guidance of $35 bn - $37 bn, sales were boosted from growth in cloud computing and revenues from advertising and media streaming services.
Starbucks closes Teavana retail outlets, Trump ditches chief of staff
Starbucks slumped -9.24% at close. The coffee chain announced it was closing all 379 of its Teavana stores. It acquired the brand in 2012. Third quarter revenue was below expectations with sales totaling $5.6 bn short of the expected $5.76 bn.
In late breaking news: President Trump replaces his chief of staff, Reince Priebus with John Kelly, Homeland Security Secretary and a retired Marine Corps General thus capping a tumultous week. It began with the resignation of press secretary, Sean Spicer; the addition of Anthony Scaramucci as director of communications and his now famous conversation with the New Yorker magazine journalist over Priebus and leakers; and a failed health care bill after a Senate vote against repealing a 'skinnier' version of Obamacare.