Third-quarter updates from tech giants Amazon.com Inc. (AMZN) and Google parent Alphabet Inc. (GOOGL) had undercut investor sentiment in markets around the world as growth projections slowed in the face of escalating trade disputes, rising interest rates and a stronger U.S. dollar. Alphabet shares turned higher at midday but again moved into the red.
The Dow Jones Industrial Average fell 298 points, or 1.2%, to 24,686; at its low for the day the index declined 539 points. The S&P slid 1.74%, and the Nasdaq dropped 2.06%. Stocks rebounded on Thursday, Oct. 25, as investors pinned their hopes on strong corporate earnings. The Dow jumped 401 points, or 1.63%, to 24,984, the S&P 500 gained 1.86%, and the Nasdaq rose 2.95%.
Third-quarter gross domestic product slipped to a 3.5% annual pace, down from 4.2% in the second quarter. Economists polled by FactSet expected GDP of 3.3% on an annualized basis.
Amazon slid 7.8% on Friday after a light revenue outlook and slower international growth from the online retailing giant overshadowed a strong earnings beat and continued services momentum.
Amazon posted quarterly earnings of $5.75 a share, easily beating estimates of $3.08, but third-quarter revenue of $56.58 billion fell short of a $57.11 billion consensus.
Revenue at Amazon Web Services rose 46% to $6.68 billion, falling slightly short of estimates of $6.71 billion. Growth slowed a bit from the second quarter's 49%, but remained above the year-earlier period's 42%.
For its seasonally big fourth quarter, Amazon guided for revenue of $66.5 billion to $72.5 billion and operating income of $2.1 billion to $3.6 billion, which are below consensus estimates of $73.79 billion and $3.86 billion, respectively. Amazon Slumps After Issuing Light Guidance: 7 Key TakeawaysAmazon Slumps After Q3 Sales Miss, Tepid Holiday Outlook as FAANG Gloss Fades "We believe the lighter than consensus guidance in Amazon's biggest quarter (fourth-quarter holiday season) is the main source of the stock falling in the after-hours market," said Jim Cramer and theAction Alerts PLUS team, which holds Amazon in its portfolio. "Investors are likely focusing on the top line miss too, but we believe this is the incorrect view of the company because it has transformed over the past few quarters."Alphabet fell 2.2% after the parent of Google posted third-quarter profit of $13.06 a share on revenue of $33.7 billion, beating bottom-line estimates of $10.41 a share but missing top-line expectations of $34.04 billion.
Advertising continues to be Alphabet's biggest cash cow, with ad revenue on Google platforms accounting for about 70% of net revenue in recent years, growing about 20% annually. In the third quarter, Google's advertising revenue totaled $28.95 billion, with Chief Financial Officer Ruth Porat noting in the earnings report that momentum was "led by mobile search and our many products that help billions of people every day."
"All in, despite the various achievements in the quarter, there is no sugar coating it, the release was ugly," said Cramer and the Action Alerts PLUS team, which holds Alphabet in its portfolio.
Intel Corp. (INTC) rose 3.1% on Friday after the chipmaker posted third-quarter earnings of $1.40 a share on revenue of $19.16 billion, topping analysts' forecasts of $1.15 a share and revenue of $18.13 billion.
Intel lifted its full-year revenue guidance to $71.2 billion from $69.5 billion and its full-year earnings expectations to $4.53 a share from $4.15.
Intel Is Up After Topping Expectations and Raising GuidanceSnap Inc. (SNAP) declined 10.3% after the social-media company posted a decline in daily active users though quarterly earnings and revenue beat Wall Street estimates.
Snap said its daily active user count was 186 million, matching expectations. That fell from 188 million in the previous quarter.
Why I'm Taking a Pass on SNAP StockChipotle Mexican Grill Inc. (CMG) rose 3.4% after third-quarter earnings topped forecasts but same-store sales growth of 4.4% missed expectations.
Colgate-Palmolive Co. (CL) fell 6.7% after third-quarter adjusted earnings of 72 cents a share matched Wall Street estimates but revenue missed.
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