Defeat for 'skinny' repeal of 'Obamacare' in Senate casts doubt on Trump plans
U.S. stock futures trimmed earlier losses Friday after a key measure on U.S. economic growth showed improvement, but was below expectations.
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Gross domestic product, swelled to a 2.6% annual rate in the second quarter, thanks to higher consumer spending.
Still, technology stocks looked set for another selloff early Friday, with Amazon delivering quarterly earnings that disappointed expectations.
Tech-focused Nasdaq-100 stock futures were trading firmly lower extending a downturn for the group that begun midday Thursday.
The failure of a Republican-led attempt to repeal or replace the Affordable Care Act in the wee hours of Friday morning (http://www.marketwatch.com/story/senate-votes-against-skinny-bill-to-repeal-obamacare-2017-07-28)--viewed as a proxy for President Donald Trump's ability to deliver on previously pledged pro-growth legislations--dampened investor sentiment.
Nasdaq-100 futures slid 36 points, or 0.6%, to 5,874. S&P 500 futures slid 5 points, or 0.2%, to 2,466. Dow Jones Industrial Average futures fell 28 points, or 0.1%, at 21,714. Shares of Dow-component Exxon Mobil Corp., (XOM) were down about 2% after reporting disappointing second-quarter results, while another blue-chip member, Merck & Co. Inc.(MRK), saw its shares trade slightly higher in premarket trade after the drug company reported quarterly results (http://www.marketwatch.com/story/merck-profit-and-sales-rise-beat-expectations-amid-big-jump-in-keytruda-sales-2017-07-28).
Tech names came under heavy pressure in that session, with the Nasdaq Composite Index 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 , 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), which reported a 77% plunge in second-quarter earnings (http://www.marketwatch.com/story/amazon-earnings-fall-77-shares-drop-2017-07-27) 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.
Read:Amazon's free-spending ways hit earnings, but don't expect a shift to thrift (http://www.marketwatch.com/story/amazons-free-spending-ways-hit-earnings-but-dont-expect-a-shift-to-thrift-2017-07-27)
(http://www.marketwatch.com/story/amazons-free-spending-ways-hit-earnings-but-dont-expect-a-shift-to-thrift-2017-07-27)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.
Economic docket: On the data front, a second-quarter reading on gross domestic product rose 2.6%, below the 2.8% expected by economists polled by MarketWatch. First-quarter GDP growth was revised to 1.2% from 1.4%.
The cost of employing the average U.S. worker rose 0.5% in the second quarter but showed little acceleration despite the tightest labor market in years.
Stocks to watch: Shares of Starbucks Corp.(SBUX) fell nearly 7%. The company posted earnings above expectations and rising global sales (http://www.marketwatch.com/story/starbucks-adj-earnings-above-expectations-teavana-stores-to-close-2017-07-27). (http://www.marketwatch.com/story/starbucks-adj-earnings-above-expectations-teavana-stores-to-close-2017-07-27) The coffee giant said it would close all of its Teavaa retail stores over the coming year.
Expedia Inc. shares (EXPE) were up 1.2% after a revenue beat (http://www.marketwatch.com/story/expedia-shares-climb-after-second-quarter-revenue-beat-2017-07-27).
Other markets: European stocks dropped to three-month lows (http://www.marketwatch.com/story/european-stocks-sell-off-as-ubs-fall-tech-worries-weigh-2017-07-28) as Swiss bank UBS Group AG fell on results. and Asian stocks (http://www.marketwatch.com/story/asian-stocks-tumble-on-heels-of-us-tech-selloff-2017-07-28) 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 and weaker-than-expected GDP numbers, with the ICE Dollar Index down 0.4% to 93.54.
Gold prices rebounded trading $3.5 to $1,263 an ounce, while oil prices were slightly higher.
(END) Dow Jones Newswires
July 28, 2017 09:24 ET (13:24 GMT)