Amazon Results Lead Nasdaq Lower
New York — Concern that earnings growth is too slow to justify U.S. equity valuations sent the Nasdaq Composite index on Friday to its biggest decline in two weeks.
Amazon.com dropped 9.9 percent after predicting an operating loss in the current quarter, contributing to a 1.8 percent decline in the Nasdaq Composite. Broadcom lost 4.4 percent to pace declines among technology shares. Visa suffered its biggest single-day loss since July after revenue missed analyst targets. Ford Motor slipped 3.3 percent after posting earnings that trailed analysts’ estimates.
The Standard & Poor’s 500 index dropped 0.8 percent to 1,863.40, leaving it down 0.1 percent for the week. The Dow Jones industrial average decreased 140.19 points, or 0.8 percent, to 16,361.46. Visa is the biggest member of the Dow. The Russell 2000 index of smaller companies sank 1.9 percent, erasing gains for the week. About 6.3 billion shares changed hands on U.S. exchanges, 12 percent below the three-month average.
Friday’s decline shared characteristics of other selloffs in the U.S. equity market over the past month.
Losses were heaviest in technology companies that have posted the biggest gains of the five-year bull market. Facebook, which doubled in 2013, and Netflix, which almost quadrupled, slid more than 5 percent. The Nasdaq 100 index dropped twice as much as the S&P 500, repeating a pattern of bigger losses that has occurred almost every time U.S. equities have fallen this month. Components in the Nasdaq Composite trade for 34.5 times reported earnings, double the valuation of members in the S&P 500.
The equities benchmark had advanced 0.7 percent in the previous four days, following its best week since July, as companies such as Apple reported earnings that beat estimates, increasing optimism about the strength of the world’s largest economy. The S&P 500 earlier in the week rallied to within six points of its all-time high before retreating.
The Thomson Reuters/University of Michigan final April index of sentiment rose to 84.1 from 80 a month earlier, topping the median estimate of 83 in a Bloomberg survey of 63 economists. The index averaged 89 in the five years before December 2007, when the last recession began.
Some 15 S&P 500 members reported earnings Friday. Of the 239 companies that have released results this season, 75 percent have exceeded analysts’ profit estimates, while 53 percent have beaten sales projections, data compiled by Bloomberg show.
Analysts predict the benchmark’s constituents will collectively report a 3.4 percent increase in first-quarter profit.
Eight of the 10 main S&P 500 industries retreated, Consumer-discretionary shares dropped 1.7 percent to pace losses as Amazon sank. Utility shares advanced 1.1 percent.