Amazon set to purchase Whole Foods for $13.7 billion
U.S. stocks traded lower Friday, with consumer staples suffering after Amazon.com announced plans to buy Whole Foods Market Inc.
Shares of Amazon.com Inc.(AMZN) rose nearly 3% after the announcement. Shares of Whole Foods (WFM), which were halted until 9:50 a.m. Eastern (http://www.marketwatch.com/story/whole-foodss-stock-halted-until-well-after-the-open-2017-06-16) following the premarket announcement, soared 27% after they resumed trading.
Shares of other big retailers were down in the wake of the acquisition, with Wal-Mart Stores Inc.(WMT) down 6.2% and Costco Wholesale Corp. (COST) off nearly 7%.
The S&P 500 fell 7 points, or 0.3%, to 2,424, with eight of the 11 main sector trading lower. Consumer staples were down 1.7% (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), on track for a steepest decline in six months, weighing on the main indexes. Energy share were leading gainer, up 0.6%. Technology shares were also lower and were set to book hefty weekly loss.
The Dow Jones Industrial Average was down 18 points, or 0.1%, to 21,340, with half of the 30 blue-chip companies trading in positive territory. The Nasdaq Composite dipped 27 points, or 0.5%, to 6,137.
For the week, the Nasdaq Composite is set to book a loss of more than 1%. The S&P 500 is on track to end the week 0.3% lower. The Dow industrials, however, are looking to log a 0.3% gain over the week.
Weaker-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. Meanwhile, University of Michigan consumer sentiment index fell to 94.5 in early June reading, the weakest since November.
"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.
Meanwhile, Wall Street could see increased volatility during the session as it is a quadruple-witching day, which means the simultaneous expiration of stock-index futures, stock index options, 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)
Wall Street stocks slipped Thursday (http://www.marketwatch.com/story/us-stocks-poised-to-slide-as-fed-signals-full-steam-ahead-on-ending-easy-money-2017-06-15), driven by yet another decline for big-cap technology names, including Amazon.com, though indexes bounced off lows. The Dow industrials and S&P 500 suffered modest declines, while the Nasdaq Composite fell 0.5%.
Opinion:Equity-allocation indicator flashes bear-market warning (http://www.marketwatch.com/story/equity-allocation-indicator-flashes-bear-market-warning-2017-06-16)
Fed speaker on tap: Dallas Federal Reserve President Rob Kaplan will appear in a moderated question-and-answer session at the Park Cities Rotary Club in Dallas at 12:45 p.m. Eastern.
Investors will likely be parsing those comments for clues about this week's Fed meeting, which resulted in an interest-rate rise, a pledge to start easing the throttle on its stimulus program and indications that another rate increase is in the pipeline.
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: Whole Foods soared 27% to $41.97 after Amazon.com Inc. is slated to purchase the grocery-chain giant for $13.7 billion or $42 a share. Whole Foods shares were down 0.9% before being halted on pending news.
Adamis Pharmaceuticals Corp.(ADMP) rose 8% 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%. The yield on the 10-year Treasury note fell by a point to 2.15%.
Asian stocks had a mixed session while European stocks were trading higher.
Meanwhile, U.S. oil prices rose 0.5%, but were still set for a weekly loss of 2% (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. Investors will get weekly U.S. oil-rig data later from Baker Hughes Inc. (BHI)
(END) Dow Jones Newswires
June 16, 2017 10:49 ET (14:49 GMT)