By Tanya Agrawal
(Reuters) - Wall Street slipped on Friday as losses in Amazon and tobacco shares weighed on major indexes.
Amazon's (O:AMZN) shares were down 3.39 percent after it reported a 77 percent drop in profit as its rapid and costly expansion into new shopping categories and countries showed no sign of slowing.
The stock was the biggest drag on the S&P 500 and the Nasdaq.
However, the tech index (SPLRCT) pared some early losses to trade down 0.22 percent. The sector has been the best performer this year, driving the S&P 500's 10.6 percent run in 2017.
"Investors are still feeling some weakness in the tech sector and that's weighing on the broader market," said Robert Pavlik, chief market strategist at Boston Private Wealth.
"I'm a bit concerned about some of the valuations, but I expect to see these stocks eventually climb higher as people look for growth. There are bound to be some bumps along the way."
The consumer staples sector's (SPLRCS) 1.86 percent fall led a broad decline as an FDA announcement seeking to cut nicotine in cigarettes to non-addictive levels dragged down tobacco stocks.
Altria (N:MO) slumped 13.2 percent and Philip Morris (N:PM) 3.5 percent. The stocks were among the top drags on the S&P.
The consumer discretionary (SPLRCD) sector, of which Amazon is a component, was down 0.97 percent also due to losses in Starbucks and Mattel.
Starbucks (O:SBUX) fell 7.50 percent and Mattel (O:MAT) 8.78 percent after their disappointing quarterly reports.
At 10:59 a.m. ET (1659 GMT), the Dow Jones Industrial Average (DJI) was down 9.97 points, or 0.05 percent, at 21,786.58 and the S&P 500 (SPX) was down 8.79 points, or 0.35 percent, at 2,466.63. The Nasdaq Composite (IXIC) was down 27.60 points, or 0.43 percent, at 6,354.59.
Risk sentiment also took a hit following the failure of Republicans to repeal Obamacare in a tight Senate vote overnight.
Investors are worried about the ability of President Donald Trump to legislate his pro-growth agenda of tax reform and higher spending on infrastructure.
"When a lot of people think about the White House, they just think of a lot of chaos going on, and if they can't get stuff together in their own house, how are they going to get it together for the country. What kind of outlook does that have for things like tax reform?," Pavlik said.
Data showed that the U.S. economy accelerated in the second quarter as consumers ramped up spending and businesses invested more on equipment.
Gross domestic product increased at a 2.6 percent annual rate in the April-June period, up from 1.2 percent in the first quarter, the Commerce Department said in its advance estimate.
Declining issues outnumbered advancers on the NYSE by 1,363 to 1,330. On the Nasdaq, 1,479 issues fell and 1,156 advanced.