Dow ticks up; grocery stores plunge after Amazon deal

Associated Press

NEW YORK

Amazon’s $13.4 billion deal for Whole Foods sent grocery stores, big retailers, and food makers and distributors plunging Friday. Energy companies rose while other stocks were little changed.

It’s rare for a single deal to have a big effect on the broader stock market, but Amazon’s agreement to buy Whole Foods Market did.

Investors wondered if Amazon will do to grocery stores and supermarkets what it’s done to sellers of goods such as clothing and office supplies: force them to make big changes or be supplanted.

Neil Saunders, managing director of the research firm Global Data Retail, said Amazon is likely to push supermarkets and grocery stores to slash prices, which will affect the companies that make and distribute those products.

“As Amazon enters the grocery-market proper, it will put a lot more pressure on existing grocers,” he said. “Those grocers will respond by cutting prices, and that will cut profits for the distributors.”

Elsewhere, energy companies rose as oil futures bounced back from their lowest price this year and utilities and industrial and basic materials ground out modest gains.

Wal-Mart had its worst day in more than a year as it fell $3.67, or 4.7 percent, to $75.24. Costco took its biggest loss in almost six years as it sank $12.95, or 7.2 percent, to $167.11. Target tumbled $2.85, or 5.1 percent, to $52.61.

Supermarkets and grocery stores had also plunged Thursday after Kroger cut its annual forecast. Kroger, which plunged 19 percent a day ago, lost another $2.27, or 9.2 percent, and hit a three-year low of $22.29. Sprouts Farmers Market skidded $1.41, or 6.3 percent, to $21.01.