US stocks flat, but blockbuster Amazon deal for Whole Foods hammer consumer shares
US stocks ended little changed on Friday, though Amazon.com’s deal to buy upscale grocer Whole Foods Market pressured a wide range of companies including Wal-Mart, while the dollar and US Treasury yields dipped after disappointing economic data.
Energy shares offset the declines in consumer names, with the S&P energy index rising 1.7 per cent and oil prices ending higher on the day.
The Amazon deal sent shock waves through the food distribution market and others, hurting stocks like Wal-Mart Stores, which slid 4.7 per cent, grocer Kroger, which tumbled 9.2 per cent, and Costco Wholesale, which fell 7.2 per cent.
The S&P 500 consumer staples index ended down 1 per cent.
“It’s disrupting a number of industries here, and that’s what’s causing the market problems,” said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Sarasota, Florida.
Shares of online retailer Amazon rose 2.4 per cent and Whole Foods shot up 29.1 per cent.
The Dow Jones Industrial Average was up 24.38 points, or 0.11 per cent, to end at 21,384.28, the S&P 500 added 0.69 point, or 0.03 per cent, to 2,433.15 and the Nasdaq Composite dropped 13.74 points, or 0.22 per cent, to 6,151.76.
MSCI’s index of stock markets across the world rose 0.3 per cent, while European shares added 0.6 per cent, rebounding from recent losses.
In the foreign exchange market, the US dollar fell against a basket of key currencies after the day’s data, which raised concerns about spending. It was last down 0.3 per cent after the day’s data.
US homebuilding fell for a third month in May to the lowest in eight months as construction activity declined broadly, while the University of Michigan said its barometer of US consumer sentiment unexpectedly fell in early June.
The Japanese yen rose against the dollar, reversing course after sliding to a two-week low, when the Bank of Japan left its mass money printing programme unchanged, maintaining the contrast with the Federal Reserve, which signalled further tightening this week.
The weaker-than-expected US data also weighed on US Treasury yields as it fueled uncertainty about the US rate outlook.
Benchmark 10-year Treasuries were last up 2/32 in price to yield 2.155 per cent, compared with 2.162 per cent late Thursday.
“There are some very serious concerns about the Fed tightening right now and about the Fed reducing their balance sheet right now. We’re potentially prompting a recession here,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
Oil prices staged a modest rebound as some producers reduced exports and US rig additions slowed.
Brent crude futures rose 45 cents to settle at US$47.37 per barrel, while US crude settled at US$44.74, up 28 cents. Both benchmarks notched a weekly loss exceeding 1.6 per cent.