2 months Amazon Stock Pulls Nasdaq Lower, Dow Futures Dip Ahead of Inflation Data       

Amazon’s slump is likely to pull the Nasdaq sharply lower Friday, but U.S. stocks will still close out July with another solid monthly gain.

The Friday Market Minute

  • Global stocks retreat to close out a volatile month, with China’s big tech crackdown, as well as Delta-variant infections, rattling investor sentiment.
  • European Q2 GDP comes in strong, with a 2% gain, while June inflation data shows an easing of price pressures that could bode well for the Fed’s ‘transitory narrative’.
  • Amazon shares slump after the online retail and tech giant’s first revenue miss in three years.
  • Robinhood stays red after a disappointing Nasdaq IPO debut that hived $3 billion from the trading app’s market value.
  • U.S. equity futures suggest a softer open on Wall Street ahead of earnings from Dow components Exxon, Chevron, Caterpillar and P&G as well as the PCE Price index release at 8:30 am Eastern time.

U.S. equity futures slipped lower Friday, with tech stocks pulled deeply into the red by Amazon  (AMZN) – Get Report following last night’s disappointing second quarter results from the online retailer, as stocks look to close out a volatile month amid lingering questions over growth and inflation risks in the world’s biggest economy.

A much stronger-than-expected second quarter earnings season, with around 90% of reporting companies topping Street earnings’ forecasts, have provided cover for the growth versus inflation debate, which was stoked further yesterday by a softer-than-forecast second quarter GDP reading and may be so again today with the release of the Federal Reserve’s preferred measure of inflation at 8:30 am Eastern time. 

Still, the solid earnings — Amazon aside — helped both the Dow Jones Industrial Average and the S&P 500 test intra-day record highs yesterday, with an extra lift coming from the Fed’s dovish policy statement Wednesday and its pledge to be patient in terms of removing any of the myriad supports currently propping up financial markets around the country.

Friday’s move looks firmly to the downside, however, with futures contracts tied to the Dow Jones Industrial Average indicating a 125 point opening bell decline and those linked to the S&P 500 priced for a 32 point pullback.

Four Dow components — Exxon Mobil  (XOM) – Get Report, Chevron  (CVX) – Get Report Caterpillar  (CAT) – Get Report and Procter & Gamble  (PG) – Get Report — will report before-the-bell earnings Friday, along with updates from Colgate-Palmolive  (CL) – Get Report and AbbVie  (ABBV) – Get Report.

Amazon, which is marked 6% lower in pre-market trading at $3,3385.00 per share, is weighing heavily on the Nasdaq, where futures indicate a 175 point slide at the start of trading for the tech-focused benchmark.

Prime Day and Web Services boosted the group’s bottom line, but the first revenue miss in three years — $113.1 billion versus a Street consensus forecast of $115.2 — and a softer near-term outlook has shares in the world’s biggest retailer heavily in the red.

Pinterest  (PINS) – Get Report, too, was adding to downward pressure with a 19.8% pre-market decline after the image-sharing social media platform said its average monthly user base fell 9% from last year as pandemic restrictions on business and travel faded.

Robinhood  (HOOD) – Get Report shares were also in focus in pre-market, with shares in the newly-listed online trading platform down another 1.5% after yesterday’s 8.4% slump that hived billions from the group’s nascent market value. 

Away from equities, bond markets were holding steady ahead of the PCE index release and inflation data from Europe showing price pressures easing modestly, to an annual rate of 1.9%, over the month of June, a move that could add fuel to the debate as to whether U.S. inflation rates will slow in the coming months as the base-effects from last year’s pandemic fall out of the Commerce Department’s calculations.

Benchmark 10-year note yields were last seen at 1.247% while the dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.1% lower at 91.795.

In overseas markets, European stocks pulled back from this week’s all-time highs, despite a better-than-expected reading of second quarter GDP and slowing inflation data, with the Stoxx 600 tracking U.S. futures to a 0.5% decline.

Overnight in Asia, China’s crackdown on big tech, education and property companies added further pressure to regional shares, with the MSCI ex-Japan index falling 1% heading into the final hours of trading.

In Japan, where coronavirus infections are hitting daily record highs amid a troubled Olympic Games, the Nikkei 225 closed 1.8% lower at 27, 283.59 points.

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