Today in the Market (10/27/2022)

Good Evening. As investors anticipated more tech earnings from Apple (AAPL) and Amazon (AMZN), as well as a better-than-expected U.S. GDP report, U.S. stocks were mixed on Thursday.

The Nasdaq Composite and the Dow Jones diverged, with the Dow rising by 0.61% and the Nasdaq falling by 1.63%. The S&P 500, which was also weighed down by tech stocks, declined by 0.61%.

ANOTHER TECH COMPANY DOWN

Amazon (AMZN) shares plummeted over 20% after the company disclosed revenue failures for the third quarter, sales misses for its Amazon Web Services cloud services, and dismal forecast for the fourth quarter.

Here is what the e-commerce behemoth announced after the closing bell:

  • Revenue: $127.1 Billion vs. $127.63 Billion expected
  • Earnings Per Share: $0.28 vs. $0.22 expected
  • Amazon Web Services Net Sales: $20.5 Billion vs. $21 Billion expected

The pain does not stop there… The company’s projection for Q4 net sales proved to be the most noticeable failure. Amazon forecasts revenue between $140 and $144 billion as opposed to the anticipated $155 billion.

Why is all of this happening? The findings of today confirm that Amazon is not immune to the consumer slump. According to both CNBC and Fortune, the company’s second Prime event this month was a disappointment. This month, Bank of America analysts projected that Amazon’s October Prime Early Access Sale generated $5.7 billion, a decrease from the $7.5 billion they calculated Amazon’s July Prime event generated.

THE NUMBERS ARE IN!

The U.S. economy rebounded well in the third quarter as the trade deficit shrank, but the figures inflated the nation’s economic health since domestic demand was at its lowest level in two years due to aggressive interest rate hikes by the Federal Reserve.

Nevertheless, the return to growth after two consecutive quarterly losses in GDP provided proof that the economy was not in a recession, despite the fact that the risks of a recession have increased as the Fed doubles down on rate hikes to combat the fastest-rising inflation in forty years.

Let’s get into the numbers! The gross domestic product expanded at an annualized rate of 2.6% in the third quarter, following a contraction of 0.6% in the second quarter

However… The report will likely have little effect on monetary policy, but Fed policymakers may find solace in the declining demand. Personal consumption expenditures price data for September and third-quarter labor cost data, scheduled for release on Friday, may carry more weight in advance of the Federal Reserve’s policy meeting on November 1-2.

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