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US stocks slip on Amazon disappointment, dollar bounces

After making record profits during the pandemic, Amazon said late on July 29 that its sales growth would slow in the next few quarters as people ventured outside their homes post-pandemic and reduced online shopping.

July 31, 2021 / 07:57 AM IST

The pan-European STOXX 600 index lost 0.45 percent and MSCI's gauge of stocks across the world shed 0.74 percent.

The pan-European STOXX 600 index lost 0.45 percent and MSCI's gauge of stocks across the world shed 0.74 percent.

US stocks dropped on July 30 to pull further from record highs as an underwhelming earnings report from Amazon.com Inc. dampened the market mood, while the dollar rose a shade but hovered near a one-month low.

After making record profits during the pandemic, Amazon said late on July 29 that its sales growth would slow in the next few quarters as people ventured outside their homes post-pandemic and reduced online shopping.

Investors sold Amazon stock even though the online retailer still earned $113 billion in revenues in the second quarter, albeit $2 billion shy of analysts' forecasts.

In Friday afternoon trade, Amazon shares slid 7 percent, dragging the tech-focused Nasdaq Composite down 0.7 percent. That fed profit-taking elsewhere, with the S&P 500 losing 0.5 percent, and the Dow Jones Industrial Average also shedding 0.5 percent. Both the S&P 500 and the Dow had struck record highs on July 29.

"Amazon's weak report and the impact on futures immediately made its impact felt on global markets," said Paul Hickey, co-founder of Bespoke Investment Group, LLC.

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But Hickey also said: "Just because investors haven't reacted to the company's recent reports with excitement doesn't mean Amazon has been a poor performer," adding that the shares have climbed 17 percent in the past year.

Still, Amazon's warning of slowing growth gave investors a reason to cash in profits.

The pan-European STOXX 600 index lost 0.45 percent and MSCI's gauge of stocks across the world shed 0.74 percent.

Treasury yields edged lower as investors shied away from higher-risk investments. Data released on Friday that showed annual inflation accelerating further above the Federal Reserve's 2 percent target but this did not appear to alter investors' bets that the Fed is in no hurry to tighten monetary policy.

Benchmark 10-year Treasury yields retreated to 1.2306 percent, from 1.269 percent late on Thursday. The yield on the 2-year note fell to 0.1898 percent, from 0.201 percent.

Currency investors took a slightly different view, betting on Friday that the Fed might not be as dovish as some think.

The dollar, which hit a one-month low on Thursday, bounced following remarks by St. Louis Federal Reserve President James Bullard that the Fed should start reducing its monthly bond purchases this fall.

The dollar index rose 0.336 percent, and the firmer dollar pushed the euro down 0.28 percent to $1.1853.

Oil prices kept their march higher, as investors bet that vaccinations would alleviate the impact of a resurgence in COVID-19 infections across the globe and keep demand growing faster than supply.

U.S. crude rose 0.64 percent to $74.09 per barrel and Brent was at $76.35, up 0.39 percent on the day.

Gold prices, which rose this week on hopes that bullion would be a good hedge against inflation given a dovish Fed, succumbed to slight profit-taking on Friday. A firmer dollar also weighed on the precious metal.

Spot gold dropped 1.0 percent to $1,810.41 an ounce. U.S. gold futures fell 1.02 percent to $1,812.60 an ounce.
Reuters
first published: Jul 31, 2021 07:57 am

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