shares of Amazon (AMZN 12.18%) It jumped 12% on Thursday after encouraging inflation reports and news of further cost cuts designed to bolster profitability at the online retail giant.
The consumer price index, a measure of inflation, rose 0.4% in October, up 7.7% year-on-year. That’s down from his year-to-date high of nearly 9% and above what Wall Street and many economists feared.
The news gave investors hope that the Federal Reserve could soon scale back rate hikes and avoid a recession. Then the stock market rebounded, S&P 500 When NASDAQ Composite They are up a whopping 5.5% and 7.4% respectively.
Positive inflation news also bodes well for Amazon. Rising costs for food, energy, shelter and many other goods and services have forced many consumers to cut back on discretionary spending. This has hit Amazon’s online retail business hard. Meanwhile, fears of an economic slowdown have prompted many companies to cut spending on technology and marketing, putting pressure on the growth of Amazon’s cloud computing and advertising businesses. If those trends start to reverse, the e-commerce giant’s growth could accelerate again.
But Amazon isn’t just waiting for the tide to turn. CEO Andy Jassy is reportedly overseeing a major cost-cutting review to right-size the company’s expenses and cut back on unprofitable projects. wall street journal.
of journal’s The report was encouraging to investors worried about Amazon’s sluggish profitability in recent quarters. The drastic cost cuts will not only stave off losses, but will also allow Amazon to make more profit from its giant e-commerce and cloud computing operations when the economy finally strengthens.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Joe Tenebruso has the following options: His $100 long call for January 2024 on Amazon. The Motley Fool invests in and recommends Amazon. The Motley Fool’s U.S. headquarters has a disclosure policy.