An earnings miss from Google-parent Alphabet sent an ETF tracking technology stocks lower as worries grew that Amazon is sucking money from the rest of the digital economy.
Health category funds dominated the list, making up for well over half of the group’s assets.
The Invesco QQQ Trust ETF (QQQ) fell as much as 0.6% in post-market trading after Alphabet reported first-quarter sales of $29.5 billion, excluding payments to distribution partners, below Wall Street estimates of $30.04 billion. Net income was $6.66 billion, or $9.50 a share, versus $9.4 billion, or $13.33 a share, a year earlier, the company said. The company’s shares fell 7.5%.
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The funds include a wide range of offerings from emerging markets to precious metals, multi-strategy and REITs.
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Consumers have increasingly been going straight to Amazon to hunt for products, and the e-commerce giant has been chipping away at Google’s ad market lead recently. Amazon said last week that first-quarter sales in its “other” segment, which is mainly advertising, increased more than 30% to $2.72 billion. Its digital franchise has grown into the third-largest in the U.S., trailing Google and Facebook, according to estimates from EMarketer.
“We’re in a very momentum-driven market, and it’s zero or one,” said David Katz, chief investment officer of Matrix Asset Advisors. “People either love earnings or they hate earnings. The market is focusing today, obviously not on the earnings, but rather on the revenues and saying, ‘Hey they’re losing.’ Part of the issue is that Facebook had such a good revenue quarter even with all their problems, so I don’t think anybody expected Google to miss.”
Shares of Alphabet make up about 9% of QQQ’s holdings. Apple, the fund’s second-largest member, will report earnings on Tuesday after the bell.
