What Happened?
Shares of cloud computing and online retail behemoth Amazon (NASDAQ:AMZN) fell 3.9% in the afternoon session after the Bureau of Economic Analysis reported that the Fed's preferred inflation gauge (the Personal Consumption Expenditures (PCE) price index) revealed core inflation came in hotter than expected, fueling fear of stagflation (an economic situation of slow growth and rising prices). Core inflation excludes food and energy prices.
The Core PCE index showed inflation rose 2.8% (vs. estimates for a 2.7% increase) in February 2025 compared to the previous year and accelerated 0.4% (vs. estimates for a 0.3% increase) over the previous month. These figures added to concerns over proposed tariffs, which rattled markets all week.
The combination of rising inflation and escalating trade tensions likely clouded the economic outlook, raising uncertainty for businesses and policymakers.
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What The Market Is Telling Us
Amazon’s shares are extremely volatile and have had 34 moves greater than 2.5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 15 days ago when the stock dropped 3.3% on the news that markets remained anxious about the negative impact of tariffs, with concerns intensifying following new updates from the Trump administration. Treasury Secretary Scott Bessent noted on CNBC, "We're focused on the real economy.... I'm not concerned about a little bit of volatility over three weeks."
Adding to the concerns, President Trump announced on Truth Social that his administration was considering imposing a 200% tariff on all alcoholic beverages imported from European Union countries. This move was in response to the EU's 50% tariff on whisky. Trump added, "This will be great for the Wine and Champagne businesses in the U.S."
Amazon is down 12.6% since the beginning of the year, and at $192.54 per share, it is trading 20.5% below its 52-week high of $242.06 from February 2025. Investors who bought $1,000 worth of Amazon’s shares 5 years ago would now be looking at an investment worth $1,961.
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