US open: Wall Street rout continues following disappointing results from tech giants

Wall Street trading began with some heavy losses at the open on Friday, with tech shares driving the declines following disappointing earnings from Amazon and Alphabet.

As of 1540 BST, the Dow Jones was down 1.60% to 25,584.09, while the S&P 500 had fallen 2.34% to 2,642.35 and the Nasdaq was trading 2.97% weaker at 7,100.80.

Although it looked like Friday's slightly better than expected US GDP reading would ease the day's losses, a tech-slide – driven by Thursday night's disappointing earnings from Alphabet and Amazon – made sure the Dow's woes continued after the bell.

SpreadEx analyst Connor Campbell, said: "Dropping 400 points, the Dow Jones found itself dipping under 24,600, in doing so striking a fresh 3 and a half month low. In the end, the fact the US Q3 GDP number came in at 3.5% against the 3.3% expected meant little to investors, especially since that beat still sees growth down from Q2's 4.2%."

Earnings from tech giants Amazon and Alphabet were the main focus of the session.

Although Amazon topped the earnings per share forecast for the third quarter, it fell short on revenues and guidance, while Google parent Alphabet surpassed quarterly earnings per share estimates but missed revenue forecasts.

Amazon shares were down 6.98% in early trade, while Alphabet slumped 3.05%.

Oanda analyst Craig Erlam said: "Risk aversion is alive and kicking on Friday, as weaker than expected tech earnings trigger the latest stampede and those still buying the dips once again get burned.

"Tech companies have raised the bar so high in recent years that the numbers reported by Amazon and Alphabet just weren't quite spectacular enough, not at a time when investors are a nervous wreck and fleeing for safety at the first sign of danger."

Elsewhere on the corporate front, Snapchat parent Snap Inc tumbled 11.59% at the opening bell after it said late on Thursday that users dropped more than analysts had expected in the third quarter, with daily active users set to fall again next quarter.

Shares in Colgate-Palmolive were 4.87% in the red after the release of its third-quarter numbers.

On the data front, America's economy slowed a tad less than expected in the third quarter, but investment was weak, according to some economists.

According to a preliminary estimate from the Department of Commerce, US gross domestic product expanded at a quarterly annualised pace of 3.5% over the three months to September, down from a clip of 4.2% over the previous three months.

Economists had pencilled-in growth of 3.3%.

The government said a reduction in export sales, together with increased purchases of goods and services from abroad, and a deceleration in non-residential fixed investment were the main drags on levels of activity, partly offset by a faster pace of inventory builds.

Non-residential fixed investment meanwhile, which includes outlays on equipment, structures and intellectual property, added just 0.12 points to GDP, down from 1.1% points over the three months to June.

On that note, Pooja Sriram at Barclays Research said: "The weak spot in today’s report was business fixed investment, with structures, equipment and residential investment all slowing considerably in Q3. This suggests that the corporate tax cuts have not induced much capital accumulation."

Elsewhere, US consumer sentiment unexpectedly deteriorated a little in October, according to a final reading from the University of Michigan.

The consumer sentiment index fell to 98.6 this month from 100.1 in September and 100.7 in October 2017. It was also down from the preliminary reading of 99.0.

Meanwhile, the index of current economic conditions declined to 113.1 in October from 115.2 last month and 116.5 in October of last year.

The index of consumer expectations nudged down to 89.3 from 90.5 last month and last October.