Stocks retreat from record highs, Amazon shares gain after earnings

Stocks fell Friday after a record-setting session a day earlier, with stocks taking a pause after strong earnings results and more encouraging economic data helped fuel the latest leg higher in risk assets. 

The S&P 500 dropped about 0.6% shortly after market open, after the index closed at an all-time high of more than 4,200 on Thursday. The Dow and Nasdaq each also retreated 

Shares Amazon (AMZN) bucked the trend and jumped to a record high after reporting first-quarter results and current-quarter guidance that exceeded expectations, with online shopping still booming even as more in-person businesses reopen. Shares of Twitter (TWTR), on the other hand, sank after its current-quarter revenue guidance fell short of estimates, disappointing investors who had hoped to see a stronger pick-up in the company’s ad sales to match trends seen at peer social media companies like Snap (SNAP) and Facebook (FB). Overall, companies comprising about two-thirds of the S&P 500 market capitalization have so far reported results, and 84% of these have topped estimates, according to data from Credit Suisse analyst Jonathan Golub. 

Equities have climbed to new highs this week amid these signs of rebounding corporate profits and economic activity, and after more dovish messaging from the Federal Reserve. A new report Thursday showed U.S. gross domestic product increased at a 6.4% annualized rate in the first quarter, bringing overall output within striking distance of its pre-pandemic levels. 

Though concerns over rising inflation during the economy and possible eventual tax hikes remain, investors have at least temporarily set aside these fears until more developments emerge on both fronts. 

“The economic backdrop is still very encouraging. I think there’s a lot of really strong tailwinds behind this recovery, whether it’s the vaccination story, the fiscal stimulus story, and very clearly an earnings season that’s done very well,” Jack Manley, JPMorgan Asset Management global market strategist, told Yahoo Finance. “But it wouldn’t necessarily surprise me if markets moved more or less sideways moving forward.”

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“I think what we’re going to see, as we’ve seen throughout the course of this year, is a continued story of winners versus losers,” he added. “So we still have to be careful about security selection, about sector selection, moving forward. And to me, I think a lot of that has to do with this continued rotation into some of the more cyclical parts of the market.”

Others struck a similar tone. 

“This positive backdrop does not mean that the current period of low volatility will persist. We expect bouts of market turbulence, as investors fret over rising inflation and the uneven global progress in combating the pandemic,” Mark Haefele, chief investment officer of global wealth management at UBS, wrote in a note Thursday. “With global stocks close to record highs, the market is also likely to be vulnerable to disappointing news on the economy or COVID-19.” 

9:30 a.m. ET: Stocks open lower 

Here’s how markets opened Friday morning: 

  • S&P 500 (^GSPC): -24.25 points (-0.58%) to 4,179.25

  • Dow (^DJI): -168 points (-0.49%) to 33,783.00

  • Nasdaq (^IXIC): -108.66 points (-0.77%) to 13,973.68 

  • Crude (CL=F): +$1.45 (-2.23%) to $63.56 a barrel

  • Gold (GC=F): +$2.00 (+0.11%) to $1,770.30 per ounce

  • 10-year Treasury (^TNX): -0.7 bps to yield 1.633%

9:02 a.m. ET: Employment costs rose more than expected in the first quarter 

Employment costs increased more than expected in the first three months of the year amid a pick-up in wages, the Bureau of Labor Statistics reported Friday.

The quarterly employment cost index rose 0.9% in the first quarter, coming in faster than the 0.7% anticipated, based on Bloomberg consensus data. This followed a 0.7% increase in the fourth-quarter employment cost index. 

The rise came amid a 1.0% increase in wages and salaries, extending an advance of 0.8% in the fourth quarter. Benefits rose 0.6% quarter-over-quarter, representing a similar gain compared to the prior quarter. 

8:35 a.m. ET: Personal income surges by the most on record in March following fiscal stimulus 

Personal income soared by the most ever recorded last month, with historic levels of fiscal stimulus helping increase consumer spending power. 

Personal income jumped 21.1% in March over February, the Bureau of Economic Analysis said Friday. This came in better than the 20.3% rise expected, according to Bloomberg consensus data. This followed a drop of 7.0% in February that was mostly attributed to some payback after the January round of stimulus checks.

Personal spending also increased more than expected last month, gaining 4.2% versus the 4.1% gain expected. The personal saving rate, or percentage that personal savings comprises of disposable personal income, climbed to 27.6%, the second-highest on record after April 2020’s rate of 33.7%. 

7:17 a.m. ET Friday: Stock futures point to a lower open 

Here’s where markets were trading before the opening bell Friday morning:

  • S&P 500 futures (ES=F): 4,178.00, down 25.5 points or 0.6%

  • Dow futures (YM=F): 33,780.00, down 171 points or 0.5%

  • Nasdaq futures (NQ=F): 13,854.00, down 99.5 points or 0.71%

  • Crude (CL=F): -$1.21 (-1.86%) to $63.80 a barrel

  • Gold (GC=F): +$1.20 (+0.07%) to $1,769.50 per ounce

  • 10-year Treasury (^TNX): -0.2 bps to yield 1.638%

6:03 p.m. ET Thursday: Stock futures drift lower after S&P 500 hits record high 

Here’s where markets were trading Thursday evening: 

  • S&P 500 futures (ES=F): 4,200.75, down 2.75 points or 0.07%

  • Dow futures (YM=F): 33,7927.00, down 24 points or 0.07%

  • Nasdaq futures (NQ=F): 13,943.5, down 10 points or 0.07%

NEW YORK, NEW YORK – MARCH 09: The New York Stock Exchange (NYSE) stands in lower Manhattan on March 09, 2021 in New York City. The Dow Jones Industrial Average rallied more than 300 points Tuesday as tech stocks surged and optimism over the recently passed Covid relief bill cheered investors. (Photo by Spencer Platt/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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