Retail Stocks Slide in Wake of Amazon's Deal for Whole Foods

Shares of retailers fell Friday after said it would buy Whole Foods Market, potentially squeezing their competitors.

Grocers were already under pressure after Kroger, the nation's biggest supermarket chain, warned of disappointing earnings a day earlier. Retailers from traditional grocers to big-box operators tumbled Friday on fears that Amazon would do to them what it did to bookstores, analysts and fund managers said.

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"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."

The giant internet retailer's stock rose 2.4%, while Whole Foods shares jumped 29%.

Rival grocers Supervalu and Kroger both tumbled, capping a brutal week for the industry. Kroger shares sank Thursday after it said increasing competition will hurt earnings for the year. That competition isn't letting up -- this week German grocery chain Lidl opened its first stores in the U.S.

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