Amazon makes a $13.7 billion bid for Whole Foods
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U.S. stocks were pressured on Friday as retailers slumped following Amazon's $13.7 billion blockbuster merger with Whole Foods Market.
Shares of Amazon.com Inc. (AMZN) rose 2.9% after the announcement, while shares of Whole Foods Market Inc. (WFM) were soaring 29%., but the broader consumer-staples sector was sinking.
The S&P 500 fell 3 points, or 0.1%, to 2,429, with consumer staples down 1.2% (http://www.marketwatch.com/story/consumer-staples-stocks-on-track-for-worst-daily-drop-in-6-months-as-amazon-eyes-whole-foods-merger-2017-06-16), the worst performer among the index's 11 sectors.
The Dow Jones Industrial Average traded at break-even levels at 21,357. The weakest performer among the main equity benchmarks, the Nasdaq Composite Index dipped 16 points, or 0.3%, at 6,148.
For the week, the Nasdaq Composite is set to book a loss of about 1%. The S&P 500 is down 0.2% for the week and the Dow is on track to log a 0.4% gain.
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Softer-than-expected data on U.S. housing starts didn't help the tone. Housing starts fell 5.5% (http://www.marketwatch.com/story/home-builders-cut-back-for-third-straight-month-2017-06-16) to an annual rate of 1.09 million in May, the lowest level in eight months. Economists polled by MarketWatch had forecast starts at a 1.23 million pace.
And the University of Michigan consumer-sentiment index fell to 94.5 in early June reading, the weakest since November.
"Aside from the weekly jobless claims, the majority of the economic data released this week--inflation, retail, housing--was below expectations," said Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research.
"In short, much weaker than expected, although the data can be quite volatile and averages for 2017 to date are still up a little from last year's averages...That said, we will need to see a rebound in starts and permits in a month's time to remain confident that the weakness today is not much more than volatility," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics, in a note.
Looking ahead, Wall Street could see increased volatility later in the session as it is a quadruple-witching day, which means the simultaneous expiration of stock-index futures and options, as well as stock options and single-stock futures.
Read:Will quadruple witching spook the market this time? (http://www.marketwatch.com/story/will-quadruple-witching-spook-the-market-this-time-2017-06-16)
Opinion:Equity-allocation indicator flashes bear-market warning (http://www.marketwatch.com/story/equity-allocation-indicator-flashes-bear-market-warning-2017-06-16)
Still, the fact that the S&P 500 remains above its main moving averages and that they point to further upside is encouraging, according to Frank Cappelleri, a technical strategist at Instinet LLC.
The key number to watch, he said, is 2,400 which was a previous resistance level that took six weeks to break through. If buying emerges as the large-cap index nears that level, 2,400 will become a crucial support area.
The Federal Reserve: Minneapolis Fed President Neel Kashkari said in an essay published on Friday that he voted against an interest-rate hike at the monetary policy meeting this week because he wasn't convinced the recent spate of soft inflation readings wasn't a continuing trend (http://www.marketwatch.com/story/feds-kashkari-says-he-didnt-agree-with-yellen-that-soft-inflation-is-due-to-one-off-factors-2017-06-16).
Need to know:Trust in tech stocks and dozens of other growth names--here's why (http://www.marketwatch.com/story/trust-in-tech-stocks-and-dozens-of-other-growth-names-heres-why-2017-06-16)
"Investors had already been digesting the fact that, despite recent weak U.S. data, the U.S. Federal Reserve appeared unconcerned about a slowdown in the U.S. economy," said Michael Hewson, chief market analyst at CMC Markets UK, in a note.
"These two factors combined, along with further weakness in the U.S. tech sector, played into the risk averse mood among equity investors as they began to mull the possibility of tighter policy, not only from the U.S. Federal Reserve, but also the Bank of England, not to mention the prospect of a discussion on tapering from the European Central Bank before the end of the year," he said.
Opinion:The smart money is refusing to buy big tech stocks now (http://www.marketwatch.com/story/the-smart-money-is-refusing-to-buy-big-tech-stocks-now-2017-06-15)
Stocks to watch: After a rough few days, big tech names were mixed with Apple Inc.(AAPL) down 0.7%, Facebook Inc.(FB) edged up 0.2%, and Alphabet Inc.(GOOGL) dropped 0.5%.
Shares of other big retailers were down in the wake of Amazon's acquisition, with Wal-Mart Stores Inc.(WMT) down 5.1% and Costco Wholesale Corp. (COST) off 5.8%.
Adamis Pharmaceuticals Corp.(ADMP) fell 2.1% after rising on news the company's rival to Mylan's EpiPen (MYL) has been approved by the Food and Drug Administration (http://www.marketwatch.com/story/adamis-pharma-stock-skyrockets-after-rival-epipen-product-gets-fda-approval-2017-06-15).
Other markets: Gains for the dollar faded, with the ICE U.S. Dollar Index , which tracks the buck against a basket of six rivals, down 0.3%.
Asian stocks had a mixed session while European stocks were mostly higher.
U.S. oil prices rose 0.5%, but were still set for a weekly loss (http://www.marketwatch.com/story/oil-set-to-add-to-streak-of-weekly-losses-2017-06-16). Concerns over a global supply glut has been cutting into oil prices.
(END) Dow Jones Newswires
June 16, 2017 13:57 ET (17:57 GMT)