By Caroline Valetkevitch
NEW YORK (Reuters) - U.S. stocks fell on Friday after Amazon.com's announcement it would buy Whole Foods Market hit the shares of Wal-Mart and grocers, while disappointing U.S. economic data hurt the dollar and U.S. Treasury yields.
The S&P 500 consumer staples index, down 1.6 percent, was the biggest drag on the benchmark S&P 500 stock index. Bucking broader declines on news of the deal, Amazon shares surged 3 percent while Whole Foods shot up 27.2 percent.
"The uncertainty over the impact of Amazon on the food industry is upsetting the market," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Sarasota, Florida.
Indeed, the deal sent shockwaves through the food distribution market, hurting stocks like Wal-Mart, which slid 5.3 percent, Kroger, which tumbled 13.1 percent, and Costco Wholesale, which fell 6.1 percent.
"The Amazon news is significant because it could be a game changer in terms of how the food industry operates," though the share price reaction of Wal-Mart and other stocks appeared overdone, Bittles said.
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The Dow Jones Industrial Average was down 2.73 points, or 0.01 percent, to 21,357.17, the S&P 500 lost 3.94 points, or 0.16 percent, to 2,428.52 and the Nasdaq Composite dropped 20.63 points, or 0.33 percent, to 6,144.87.
MSCI's index of stock markets across the world inched up 0.2 percent, while European shares added 0.5 percent, rebounding from recent losses.
In the foreign exchange market, the U.S. dollar fell against a basket of key currencies; it was down 0.3 percent after the day's data, which raised concerns about spending.
U.S. homebuilding fell for a third month in May to the lowest in eight months as construction activity declined broadly, while the University of Michigan said its barometer on U.S. consumer sentiment unexpectedly fell in early June.
The Japanese yen reversed course against the dollar after earlier sliding to a two-week low, when the Bank of Japan left its mass money printing program unchanged, maintaining the contrast with the U.S. Federal Reserve, which signaled further tightening this week.
The weaker-than-expected U.S. data also weighed on U.S. Treasury yields as it fueled uncertainty about the U.S. rate outlook.
Benchmark 10-year Treasuries were last up 2/32 in price to yield 2.153 percent, compared with 2.162 percent late Thursday.
In commodities, oil edged up but remained on track for losses for the week on persisting worries over the glut in supply.
Brent was up 0.6 percent at $47.20 a barrel while U.S. crude was up 0.5 percent at $44.66.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=https://bsmedia.business-standard.comemea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarket
(Additional reporting by Marc Jones in London; Nichola Saminather in Singapore; Editing by Bernadette Baum)