Wall Street was lower in early afternoon trading yesterday for the fourth straight day as a fall in materials and health stocks and a fall in commodities overshadowed strong results from Amazon, Visa and Starbucks.
Amazon.com shares jumped as much as 20.4 per cent to a record of $580.57 after the online retailer posted an unexpected quarterly profit.
The jump catapulted Amazon’s market value to about $270 billion, overtaking Wal-Mart.
Metal prices hit multi-year lows as weaker-than-expected data from China and the euro zone raised concerns about global growth while oil prices neared four-month lows.
The three major indexes were poised to end the week in the red as Biogen’s 19 per cent slump weighed the most on the Nasdaq and the S&P 500 and dragged down other health stocks.
Adding to the day’s pressure, Democratic presidential candidate Hillary Clinton will propose nearly doubling the US capital gains tax rate on short-term investments, the Wall Street Journal reported.
Second-quarter S&P 500 earnings have been mixed, with 74 per cent of companies beating analysts’ profit expectations but just 52 per cent surpassing revenue expectations, according to Thomson Reuters data. RBC Capital Markets said investors were treating disappointing stocks harshly.
While only 20 per cent of companies have missed expectations, below the 23 per cent over the past three years, there was a 3.5 per cent selloff versus the 2.4 per cent seen historically, a note said.
Adding to the concerns regarding lukewarm earnings, the S&P 500 is relatively expensive, trading at 16.9 times forward 12 months’ earnings, above the 10-year median of 14.7 times, according to StarMine data.
“We are not going to see a lot of earnings growth in the second half of the year as the economic data hasn’t been very strong,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
“The fall in commodities is also a concern that global growth is slowing and that ties into US growth too.”
Data yesterday showed new US single-family home sales fell in June to their lowest level in seven months and May’s sales were revised sharply lower.
Other data showed manufacturing activity nudged up in July after slowing for three straight months.