Trump tweets on Amazon sends tech stocks reeling on Wall Street

High-tech stocks on Wall Street continued their pre-Easter plunge, fuelled by signs of greater scrutiny and regulation as well as a consumer backlash.

The Nasdaq Composite Index, which last set a record close just three weeks ago, skidded 2.7% to close at 6870.12.

The Dow Jones Industrial Average lost 459.05 points, or 1.9%, to 23,644.19 and the S&P 500 was down 2.2% to 2581.88, the lowest close this year for both indexes.

Facebook fell 3% and has lost about $US83 billion in market value since mid-March.

Amazon.com also came under further pressure, shedding 5.85%, after weekend tweets from President Donald Trump that attacked the company’s business practices.

Tesla, which faced rebukes from the National Transportation Safety Board over the disclosures it made about a fatal crash involving one of its vehicles and its semiautonomous driving system, slipped 4.2%. Apple and Google parent Alphabet fell more than 1%.

FAANG stocks losses
Altogether, the so-called FAANG stocks – Facebook, Apple, Amazon, Netflix and Alphabet – have lost roughly $US324 billion in market capitalisation since March 16.

“Whenever you think there’s some relief in sight, we get some political noise that comes out and it spooks the entire technology sector,” says Mohit Bajaj, director of ETF trading solutions at brokerage WallachBeth Capital.

Despite investor jitters, many of the companies under the biggest scrutiny have also delivered a strong track record of sales, with the holiday season pushing Amazon’s last quarterly profit above $US1 billion for the first time.

Sales of Apple’s flagship iPhone product have helped record its best quarterly revenue and profit ever.

This raises the question of whether the tech selloff has been overdone. Facebook is down 12% for the year following a 53% surge in 2017, Apple is down 1.4% after a 46% run in 2017 and Alphabet has shed 4.3% after rising 33% last year.

“In general tech is still growing earnings at an incredible pace, and we’ve created lots of opportunity for buyers,” says Art Hogan, managing director and chief market strategist at B. Riley FBR.

Trade war escalates
Meanwhile, the trade war between the US and China escalated as China imposed import tariffs on US goods from pork to wine in a response to tariffs on Chinese steel and aluminium.

Traders and analysts fear that a full-blown trade war will squeeze global growth and dampen the strong fuel demand that has helped push oil prices to multiyear highs.

Oil prices slid to a two-week low. Light, sweet crude for May delivery fell $US1.93, or 3%, to $US63.01 a barrel in New York, its lowest close since March 19. Brent, the global benchmark, declined $US1.70, or 2.5%, to $US67.64 a barrel.

US government bonds were little changed as a decline in stock prices led some investors to seek safety in treasury debt. The yield on the 10-year note edged up to 2.750% from 2.741% on Thursday. 

Asian sharemarkets were mixed yesterday, with Hong Kong up 0.2% and Singapore up 0.08%, while Shanghai fell 0.2% and Tokyo eased 0.3%.

European markets remained closed for the Easter holiday.

World week ahead
This week features inflation and unemployment figures in Europe, the March US jobs report and an interest-rate decision by the Reserve Bank of Australia, due today. 

It is widely expected to keep rates steady, which would mark the 20th consecutive month without a change. The inflation outlook, high business confidence, weak wage growth and consumer spending risks give the Reserve Bank of Australia reason to stand pat.

The eurozone’s annual rate of inflation fell for a third straight month in February, reinforcing the European Central Bank’s sense of caution as it considers further steps to wind down its stimulus programmes.

But some relief may be at hand, with economists forecasting figures due out on Wednesday will record a pickup to 1.4% in March, from 1.1% in the previous month.

Separate figures are expected to show a further decline in unemployment in February.

The US Labor Department’s jobs data for March, due out on Friday, are expected to a further drop in the unemployment rate to a near two-decade low of 4%, from the current 4.1%.

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