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Amazon Shares Reflect Uncertainty
Shares in Amazon are trading a touch lower ahead of the open on Tuesday. The company’s stock remains down off the YTD highs for now despite a broad uptick in stocks on the back of Friday’s US jobs report. Shares were recently lifted by a set of better-than-forecast Q1 results, reported April 27th. Both earnings and revenues were seen beating forecasts though revenues were down sharply from the prior quarter.
US Economic Outlook
One of the big issues for Amazon near-term is concerns over economic growth in the US. Amazon noted that it has observed a shift in consumer spending behaviour with US consumers looking to reduce costs amidst the current cost-of-living crisis. Higher rates and still-elevated inflation are roadblocks for Amazone near-term. The company also noted a fall in its retail business as consumers returned to instore shopping on the back of the pandemic.
Fed Expectations
Despite the better-than-forecast results, Amazon warned of a slowdown in its cloud computing business over the current quarter. Additionally, the company cited plenty of uncertainty linked to the US economic outlook. While Friday’s jobs data was initially welcomed by traders, it also raises the risks of a further rate hike from the Fed. Looking ahead, tomorrow’s US CPI release will be key for Amazon shares. If CPI is seen holding around the 5% or indeed, showing any unexpected strength, this will likely weigh sharply on the stock with pricing likely to rise for a June hike. Alternatively, if CPI is seen falling further this should help drive the stock higher, diluting risks of a further hike in June.
Technical Views
Amazon
The correction lower has seen the stock finding support into a test of the 103.36 level and rising channel lows. While above here, the focus is on a further push higher with the 112.63 level the next resistance to note. To the downside a break of the channel will turn focus to 96.47 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.