Shares of retailers fell Friday after Amazon.com said it will buy Whole Foods Market, potentially squeezing its grocery store competitors.
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It marked another hit to grocers that were already under pressure after Kroger, the nation's biggest supermarket chain, warned of disappointing earnings. Retailers from traditional grocers to big-box operators tumbled on fears that Amazon's plans to delve deeper into the grocery store space may hurt their businesses, similar to how the online retailer pressured bookstores.
"This is a shot across the bow," said Sean Lynch, co-head of global equities at the Wells Fargo Investment Institute. "The worry is that Amazon is going to impact the market, drive margins down."
Amazon said early Friday it would pay $42 a share for Whole Foods, valuing the grocer at a 27% premium to its closing price Thursday. The giant retailer's stock jumped 3.1%, while Whole Foods shares rose 27%.
Rival grocers Supervalu fell 14% and Kroger tumbled 13%. On Thursday Kroger dropped 19% after its said increasing competition will hurt earnings for the year.
Big-box operators such as Wal-Mart and Target fell 5.4% and 9.2%, respectively, on Friday.
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Technology stocks also ticked lower, extending losses for a sector that has been under pressure over the past week.
The tech-heavy Nasdaq Composite fell 0.4%. The S&P 500 declined 0.2% and the Dow Jones Industrial Average lost 9.8 points, or less than 0.1%, to 21350.
Tech remains the best performing S&P 500 sector in the index in 2017, up 17% year-to-date. But the last week has been rough for the group. Since June 8, the sector tumbled about 3.9%. On Friday, the sector slipped 0.2%, on track for its third consecutive session of declines.
"Tech has done exceptionally well this year," said Yogi Dewan, chief executive at Hassium Asset Management, pointing to signs of solid revenue growth in the sector. "But at these valuations, we're not putting new money into it," he said.
Some of the biggest tech names have posted sharper declines. Since June 8, Apple's stock has tumbled 7.4%, while Google parent Alphabet is 5% lower.
Despite a wobble in some of this year's best performing stocks, equities posted their greatest weekly inflows this year, according to EPFR Global data. Mr. Dewan said pullbacks this year have been short and overall volatility has been low because of the high cash levels he's seen among investors, with many clients waiting for any pullbacks in the market to add to their stock holdings. Fund managers surveyed by Bank of America increased cash in their portfolios in June, bringing their cash allocations well above the historical average.
Government bond yields were slightly lower, with the yield on the 10-year Treasury note at 2.154% from 2.160%. Yields fall as prices rise.
The WSJ Dollar Index slipped 0.2% Friday after climbing significantly earlier this week after the Federal Reserve's Wednesday meeting, where officials signaled further interest rate rises ahead.
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(END) Dow Jones Newswires
June 16, 2017 12:13 ET (16:13 GMT)