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Wall Street stocks followed the European and Asian stock exchanges down Friday after markets were battered this week by nervousness over slowing global growth and Beijing’s regulatory crackdown on tech companies.
The S&P 500 closed 0.5 percent despite the blue chip index still posting gains for its sixth straight month, aided by strong corporate earnings and record low interest rates.
The technology-oriented Nasdaq Composite slipped 0.7 percent after the quarterly results of the online market leader Amazon missed the forecasts of the analysts. The tech company’s stock ended the day 7.6 percent lower, its biggest daily decline since May 2020.
According to Scott Rüsterholz, portfolio manager at Insight Investment, companies that experienced significant growth during the pandemic could see revenue shifts as consumers move from online services to personal services.
“[Consumers are] will begin to spend more on services, and so companies and industries that have benefited in the last year, companies like Amazon, will talk about a slowdown in sales growth for several quarters, ”said Rüsterholz.
The sell-off on Wall Street comes after the continent-wide Stoxx Europe 600 index ended the session 0.5 percent lower after hitting a high a day earlier, boosted by a bumper crop of bullish earnings results.
For the second quarter, companies on the Stoxx 600 reported growth in earnings per share of 159 percent year over year, according to Citigroup. Those in the S&P 500 have increased their profits by 97 percent.
But “this is probably the high point,” said Arun Sai, senior multi-asset strategist at Pictet, referring to the pace of earnings growth after economic activity recovered from the contractions triggered by the pandemic last year. The financial markets, he said, “have formed a narrative of peak economic growth and peak momentum”.
The data released on Thursday showed that the U.S. economy grew at an annual rate of 6.5 percent weaker-than-expected in the three months to June as labor shortages and supply chain disruptions persisted.
Meanwhile, China’s regulatory attack on large tech companies has raised concerns about broader crackdown on private companies.
“It underscores the leadership’s ambivalence towards the markets,” said Julian Evans-Pritchard of Capital Economics. “We assume that this will have a negative impact on economic growth in the medium term.”
Hong Kong’s Hang Seng index closed 1.4 percent on Friday, while the CSI 300 in mainland China fell 0.8 percent after the sharp drops eased earlier in the week.
Japan’s Topix closed 1.4 percent lower after the daily number of Covid cases in Tokyo exceeded 3,000 for three consecutive days. South Korea’s Kospi 200 lost 1.2 percent.
More cautious investor sentiment on Friday sparked a modest rally in safe havens like Treasuries, which cut the ten-year Treasury yield, which is reversing price, 0.04 percentage points to 1.23 percent.
The Federal Reserve, which has borrowed $ 120 billion every month throughout the pandemic,
“Rejuvenation [of the bond purchases] could be delayed, which in many ways is not bad news for the market, ”said Anthony Collard, Head of Investments for the UK and Ireland at JPMorgan Private Bank.
The dollar, which is considered a haven even in times of stress, climbed 0.3 percent against a basket of leading currencies.
Brent crude, the global oil benchmark, rose 0.4 percent to $ 76.33 a barrel.
Unsecured – markets, finances and strong opinion
Robert Armstrong dissects key market trends and discusses how the best minds on Wall Street respond to them. Register here to receive the newsletter directly in your inbox every weekday