Wall Street opens lower on Amazon's big profit miss, repeal Obamacare failure

A street sign near the New York Stock Exchange in New York, on Feb 16, 2017.
A street sign near the New York Stock Exchange in New York, on Feb 16, 2017.PHOTO: AFP

NEW YORK (REUTERS) - US stock indexes opened lower on Friday (July 28) as Amazon's profit miss spooked investors and dragged down shares of other technology companies.

Amazon's shares were down 4.21 per cent after it reported a 77 per cent drop in profit as its rapid and costly expansion into new shopping categories and countries showed no sign of slowing.

The stock was the biggest drag on the S&P 500 and the Nasdaq. The consumer discretionary index, of which Amazon is a component, was the worst performer among the 11 major S&P sectors.

Facebook, Google parent Alphabet and Netflix, part of the high-flying "FANG" stocks, were also lower.

The tech index was down 0.55 per cent. However, the sector has been the best performer this year, driving the S&P 500's 10.6 per cent run in 2017.

Risk sentiment also took a hit following the failure of Republicans to repeal Obamacare in a tight Senate vote overnight.

Investors are worried about the ability of President Donald Trump to legislate his pro-growth agenda of tax reform and higher spending on infrastructure.

"It appears that Obamacare has become a nightmare for Trump and not good news for the markets as well," said Naeem Aslam, chief market analyst at ThinkMarkets.

"The ability of Trump to deliver on his many promises such as tax and stimulus packages are really shattered. This is going to have a negative impact on the markets as the Trump trade would wind up even further."

At 9:37am ET (1337 GMT), the Dow Jones Industrial Average was down 8.75 points, or 0.04 per cent, at 21,787.8 and the S&P 500 was down 4.64 points, or 0.18 per cent, at 2,470.78.

The Nasdaq Composite was down 32.47 points, or 0.51 per cent, at 6,349.72.

Starbucks fell 7.50 perc ent, while Mattel was down 8.78 per cent after their quarterly reports.

Data showed that the US economy accelerated in the second quarter as consumers ramped up spending and businesses invested more on equipment.

Gross domestic product increased at a 2.6 per cent annual rate in the April-June period, up from 1.2 per cent in the first quarter, the Commerce Department said in its advance estimate.

Exxon was down 1.90 per cent after the world's largest publicly traded oil producer's quarterly profit missed estimates.

Intel rose 1.63 per cent after the chipmaker lifted its revenue forecast.