Technology stocks looked set for another selloff early Friday, with tech-focused Nasdaq-100 stock futures trading lower extending a downturn for the group begun midday Thursday and as Amazon missed forecasts.
A key measure on U.S. economic growth is on tap for later in the morning, while the failure of a Republican-led attempt to repeal or replace the Affordable Care Act in the wee hours of Friday morning—viewed as a proxy for President Donald Trump’s ability to deliver on previously pledged pro-growth legislations—dampened investor sentiment.
Nasdaq-100 futures NQU7, -0.60% slid 38 points, or 0.6%, to 5,871.75. S&P 500 futures ESU7, -0.27% slid 7.15 points, or 0.3%, to 2,464.75. Dow Jones Industrial Average futures YMU7, -0.15% fell 34 points, or 0.2%, at 21,709.
Techs came under heavy pressure in that session, with the Nasdaq Composite Index COMP, -0.63% closing 40 points, or 0.6%, lower at 6,382. At one point, it was down over 100 points. That selling weighed on the S&P 500 index SPX, -0.10% which closed off 0.1% to 2,475.42. The Dow, however, managed to score a fresh all-time closing, ending 0.4% higher at 21,796.55.
Less than spectacular corporate results from Amazon.com Inc. AMZN, -0.65% which reported a 77% plunge in second-quarter earnings also is likely to add to a recent pause in the market’s gains, as Wall Street reassesses valuations of Wall Street’s highest fliers, which have helped equity benchmarks notch repeated records. Amazon, run by CEO Jeff Bezos, saw its shares down 3% in premarket trade.
Some analysts said tech gloom may be compounded by worries over U.S. politics.
“While Amazon’s results may only be responsible for some short term negativity, with the tech sector as a whole is still enjoying a remarkable year, the failure in the Senate could pose further problems for President Donald Trump and his growth agenda,” said Craig Erlam, senior market analyst at OANDA in a note.
Trump setback: Investors have been watching the U.S. political landscape closely for clues to whether U.S. Trump will ultimately be able to push through his tax cuts and stimulus packages. These are seen as potentially giving a boost to the U.S. economy. Analysts said the latest failure doesn’t bode well for those economic ambitions.
“Let’s just say that without those stimulus packages and the tax reforms, we could say goodbye to the Trump dream,” said Naeem Aslam, chief market analyst at ThinkMarkets.
Economic docket: On the data front, a second-quarter reading on gross domestic product is scheduled for release at 8:30 a.m. Eastern Time. Forecasts are for growth of 2.8%, compared with 1.4% in the previous quarter.
“The GDP growth of 3 percent or higher which he promised is not going to see the daylight any time soon,” said Aslam.
Also a report on the employment-cost index in the second quarter is also due at the same time as GDP, while the University of Michigan’s consumer-sentiment survey for July is due at 10 a.m. Eastern.
Stocks to watch: Shares of Starbucks Corp. SBUX, +2.69% fell nearly 6%. The company posted earnings above expectations and rising global sales. The coffee giant said it would close all of its Teavaa retail stores over the coming year.
Earnings ahead: Exxon Mobil Corp. XOM, +0.57% and Chevron Corp. CVX, +0.94% will report ahead of the bell. Also on the early list are Merck & Co. Inc. MRK, +3.06% and American Airlines Group AAL, -1.98%
Other markets: European stocks SXXP, -0.90% dropped to three-month lows as Swiss bank UBS Group AG UBSG, -2.47% fell on results. and Asian stocks ADOW, -0.80% mostly fell Friday on the heels of that slump for U.S. tech stocks.
The dollar was back under pressure after the Senate health care vote, with the ICE Dollar Index DXY, -0.19% down 0.11% to 93.76.