Wall Street retraces, in the aftermath of the record closure archived by the S&P 500 in the wake of the enthusiasm fueled by the publication of the financial statements, on the eve, of Apple and Facebook.
The Dow Jones loses more than 100 points (-0.34%) to about 33,948 points; the Nasdaq gives about 0.50% to about 14,013 points, the S&P 500 is -0.44% to 4,192 points.
Amazon’s extraordinary results are not enough to sustain investor sentiment, just as the good news from the macroeconomic front is not enough, which confirmed, in addition to the solidity of US economic fundamentals, also the increase in inflation.
That said, the reflation trade appears to have stopped for now, as US Treasury rates remain under control at around 1.64%, still well below the more-than-a-year record tested around 1.77. %, at the end of March.
Before the start of the session, the data relating to consumer spending was published, which rose by 4.2% in March, better than the + 4.1% expected and -1% in February.
Personal income flew by 21.1%, more than the estimated + 20.3%, compared to the decline of 7.1% the previous month. The data benefited from economic stimulus measures launched by the US administration, most notably the $ 1.9 trillion Biden bazooka approved before mid-March, which resulted in millions of Americans receiving direct payments of up to $ 1,400 in their checking accounts.
Focus on the trend of the PCE index in March that emerged from the data, a thermometer of US inflation, which rose on a monthly basis by 0.5% and 2.3% on an annual basis. The core PCE – closely monitored by the Fed – advanced 0.4% on a monthly basis and 1.8% on an annual basis.
Among the company news, focus precisely on Amazon, after the e-commerce giant announced better than expected profits and revenues in the first quarter of the year. Notably, net profits stood at $ 8.1 billion, bringing the total profits the giant grossed over the period of the Covid-19 pandemic to $ 26.9 billion. As MarketWatch points out, this is more than the overall earnings that Amazon reported in the previous three years. Amazon also tripled its earnings for the first quarter of the year, compared to those of the first quarter of 2020, when profits, on a net basis, were $ 2.5 billion.
The group founded by Jeff Bezos has benefited from the pandemic phase, which has led consumers all over the world, confined to their homes due to the restrictions-measures of lockdown imposed globally, to opt for online shopping.
Earnings per share for the first quarter of 2021 stood at $ 15.79, significantly better than the expected $ 9.54 per share. Revenue was $ 108.52 billion, compared to $ 104.47 billion expected by the consensus. Amazon believes the positive momentum will continue into the second quarter as well, which should dampen investor fears about the risk that the giant’s business could slow down in a post-pandemic environment.
The company expects to earn in the second quarter between $ 110 and $ 116 billion, better than analysts’ estimates. The Amazon stock is up by about 1.7%.
Twitter slides down to -14% after the social network warned of a possible slowdown in user growth and increased spending.
Apple is also in the spotlight, after the announcement by the European Commission, which has ruled that the iPhone giant has “abused its dominant position” in the distribution of streaming music apps through its App Store.
Brussels had launched an investigation on the App Store last year, after the report came from the streaming music platform Spotify, which in 2019 had denounced how Apple was demanding a 30% commission from APP developers on every transaction that took place on the App Store. . In the complaint, Spotify accused Apple of preventing developers from communicating with customers. The EU has practically opened a formal investigation into the case. Apple replied that the European Union’s position is contrary to the principle of “fair competition”. The Apple stock drops almost 1%.