OVER US$200 bil in stock market value went up in smoke in extended trade on Thursday after a weak forecast from Amazon added to a string of downbeat quarterly reports from US Big Tech companies.
Amazon’s stock tumbled 17% after the bell, wiping out US$190 bil in market capitaliSation after the retail and technology heavyweight projected a holiday slump that would leave current-quarter sales below Wall Street estimates.
Also, after the bell, Apple shares fell about 1%, erasing about $30 bil of its stock market value after the Cupertino, California company reported quarterly iPhone sales that fell short of Wall Street targets.
The latest in a string of poor quarterly results from some of Wall Street’s most widely owned companies underscores deep worries about the health of the global economy as central banks raise interest rates in a battle against inflation.
At the close of trading, the Dow Jones Industrial Average rose 194.17 points or 0.61% to 32,033.28 but both the S&P 500 lost 23.3 points or 0.61% to 3,807.3 and the Nasdaq Composite dropped 178.32 points or 1.63% to 10,792.68.
“Big Tech companies are not impervious to slowdowns in the economy, particularly if they are consumer driven,” said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.
“As the Fed embarks on this planned slowdown, it is eating away at some of their consumer-faced businesses, and given their high multiples it is causing big contractions in their stock prices,” Meckler said.
Amazon’s weak report sent Nasdaq futures tumbling about 3%, showing traders expect Wall Street to open with a deep decline on Friday. Google-owner Alphabet and Microsoft dropped about 1% each, adding to losses following their own poorly received quarterly reports on Tuesday.
Thursday’s late-day reports also followed disappointing results from Facebook-owner Meta Platforms that earlier sent its stock plummeting 25%. Thursday’s drop left Meta’s stock market value at about US$260 bil with the one-time behemoth now about the 20th most valuable company on Wall Street.
If Amazon’s drop after hours is reflected in Friday’s trading session, it will have been its deepest one-day loss since 2006.
Among a handful of winners late on Thursday, Pinterest surged 12% after the social media platform reported higher than expected quarterly revenue while Intel climbed 6%, despite forecasting annual revenue below analysts’ estimates. – Oct 28, 2022
