The stock market’s trade war jubilee doesn’t look poised to carry over into a second day, as the Dow struggled to build on yesterday’s triple-digit gain.
Rather, the index teetered sideways after a Walmart-backed retail coalition demanded that the Trump administration target Amazon and Google for anticompetitive practices.
All of Wall Street’s major indices struggled for momentum on Tuesday. As of 10:25 am ET, the Dow Jones Industrial Average had lost 29.62 points or 0.11%; the DJIA last traded at 26,687.81.
The S&P 500 bounced around its previous close. At last check, the index was up 0.32 points or 0.01% to 2,964.65.
The Nasdaq slid 7.8 points or 0.1% to 8,083.47.
Stocks struggled on Tuesday as Wall Street shifted its attention from the G-20 summit to what many analysts expect to be a dreary earnings season.
Concurrently, the Retail Industry Leaders Association (RILA), a trade group whose members collectively report $1.5 trillion in annual sales, sent the Federal Trade Commission (FTC) a letter exposing how tech leviathans like Amazon and Google allegedly use their search algorithms to manipulate the retail marketplace and stealthily circumvent regulations encouraging price competition.
The RILA, whose 200 members include major brick-and-mortar retailers like Walmart, Target, and Best Buy, said that it was “quite concerning” that Amazon and Google share a near-duopoly on digital product searches and frequently use that power to favor their own products.
From the letter:
“The Commission’s approach to retail markets must thus be driven by a recognition that control over an information bottleneck by such a company has the power to skew markets and shape consumer behavior in ways that circumvent the traditional power of price competition. To put the matter as simply as possible, a firm does not need to have the power to control prices if it has the power to control effective access to price information.”
Neither Amazon nor Google is a Dow component. However, several RILA members feature prominently in the index.
The Dow’s third-largest component, Home Depot (5.34% weighting), and sixth-largest component, Apple (5.12% weighting), are RILA members.
Walmart boasts a 2.81% weighting, Nike holds a 2.17% weighting, and the parent company of Walgreens has a 1.39% share in the index.
Collectively, these five companies account for nearly 16% of the entire DJIA.
In its letter, the RILA warns that while the digital revolution has brought consumers dramatic benefits, a darker side has begun to emerge as power has become centralized in the hands of a few gigantic companies.
“It’s pretty clear to us that the FTC and different relevant regulators should be taking a much closer look at these platform companies,” Nicholas Ahrens, vice president of innovation for RILA, told Bloomberg.
Republican presidential administrations have traditionally had little appetite to wage war on big business. However, the current resident of 1600 Pennsylvania Avenue has taken a combative approach to his relations with major tech companies – social media firms in particular.
Under President Trump’s watch, both the FTC and the Justice Department have begun to eye Silicon Valley with enhanced scrutiny. Amazon is already in the FTC’s crosshairs, while Google – along with major Dow component Apple – is the subject of a Justice Department probe.
Criticism of US tech giants has become a bipartisan effort. Democratic presidential candidate Elizabeth Warren has called for the government to forcibly break up Amazon, Facebook, Google, and Apple. Republican Senator Ted Cruz retweeted one of Warren’s anti-Facebook posts and said that the tech giant was a “serious threat to our democracy.”
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