The daily business briefing: July 27, 2018
Amazon reports record earnings, Facebook suffers biggest one-day loss in U.S. market history, and more
Amazon reports record earnings
Amazon said Thursday that it earned $2.5 billion in profit in the latest quarter, a huge jump from $197 million in the same period last year. The gains were fueled by ongoing growth in subscriptions to Amazon's Prime service, along with its cloud computing and advertising businesses. This marks Amazon's third straight quarter with more than $1 billion in profit, and its first ever above $2 billion. Daniel Ives, an analyst with GBH Insights, wrote in an investor note Thursday that Amazon's accelerating profits were a "potential game changer" as the e-commerce giant invests big in fulfillment centers, new stores, and content deals. Amazon shares rose by 4.6 percent in pre-market trading.
Facebook faces biggest one-day market-value loss in history
Facebook shares plunged by 19 percent on Thursday, amounting to the biggest one-day loss in market value in U.S. stock market history. At Wednesday's close, the social media giant was worth $630 billion, but by the end of trading on Thursday its market capitalization had fallen to $510 billion, a loss of $120 billion. The disaster came after the company reported its weaker-than-expected quarterly revenue and warned that its efforts to respond to privacy concerns following the Cambridge Analytica data scandal would cut into revenue growth in the second half of 2018.
Trump defends tariffs in farm, steel states
President Trump defended his tariffs against China and other trade partners in appearances in two farm states on Thursday. "We just opened up Europe for you farmers," Trump told supporters in Iowa before heading to Illinois to visit a reopened steel plant. In Illinois, he said, "We've got aluminum coming out good, we've got steel coming out beyond good." The remarks came after Trump faced sharp criticism from Democrats and Republicans alike over his tariffs, which have fueled rising global trade tensions. Farm groups have blamed the tariffs for undercutting crop prices. The White House has responded with a promise of $12 billion in emergency aid to farmers hurt by the trade war.
Twitter posts record profit but shares plunge on drop in monthly users
Twitter posted record quarterly profit but a drop in users, sending its stock price plunging by 15 percent in pre-market trading on Friday. The social media company, like Facebook, has faced pressure to purge fake accounts and weed out misinformation, hate speech, and abusive content. Twitter said its removals and suspensions of questionable accounts in recent months contributed to a decline in monthly users by 1 million to 335 million. Financial analysts had expected Twitter to gain 1 million users. CEO Jack Dorsey noted that daily users increased by 11 percent compared to a year ago. He said that indicated that Twitter's crackdown on "problem behaviors" was resonating and making it more of a daily utility.
Stock futures inch higher ahead of economic growth data
U.S. stock futures edged higher early Friday as investors digested the latest corporate results and anticipated data on economic growth. Futures for the Dow Jones Industrial Average rose by 0.1 percent, while those of the S&P 500 and Nasdaq-100 gained 0.04 percent and 0.2 percent, respectively. The Nasdaq got a lift from Amazon's record earnings, which sent its shares rising and offset Thursday losses for tech stocks after Facebook's disappointing results. Economists polled by MarketWatch predicted that annual economic growth would be a strong 4.2 percent.