What's Going On With Amazon? Strong Consumer Spending Environment Bodes Well For E-Commerce Stock

Amazon.com Inc AMZN shares are trading higher following a lower-than-expected July Producer Price Index (PPI) report.

What Happened: The July PPI, a key measure of inflation at the wholesale level, rose by just 0.1% month-over-month — a deceleration from June's 0.2% and falling short of the anticipated 0.2% increase. Annually, the PPI climbed by 2.2%, down from 2.7% in June and below the projected 2.3%.

This tepid inflation data has led traders to increase their expectations for a more substantial rate cut by the Federal Reserve. Before the PPI release, the market was already forecasting a 52% probability of a 50-basis-point rate cut in September, but this probability has since risen to 55% following the report.

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Such expectations are likely to have a positive impact on Amazon's stock. A larger rate cut would lower borrowing costs for consumers and businesses alike, potentially boosting consumer spending and investment. For Amazon, this could translate into increased consumer purchases and higher revenues, as lower interest rates tend to stimulate economic activity.

The company's stock typically benefits from a stronger consumer spending environment, which is bolstered when economic conditions are favorable and credit is more accessible.

What Else: In the broader market, the news saw futures for major indices like the SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust, Series 1 QQQ rising, reflecting the overall bullish sentiment. U.S. Treasury bonds also gained, indicating increased investor appetite for safer assets amidst the expectation of looser monetary policy.

As the market anticipates the upcoming Consumer Price Index (CPI) report on Wednesday, which is expected to show a slight decrease in inflation, the prospect of further Fed rate cuts could continue to drive positive sentiment across equities, including Amazon.

Investors will be closely watching the CPI data to gauge whether it reinforces the case for a larger rate reduction, which could further support stock prices and economic growth.

Read Also: What’s Going On With Carvana Stock Tuesday?

How To Buy Amazon Stock: Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here.

Many will allow you to buy ‘fractional shares,' which allows you to own portions of stock without buying an entire share. For example, some stock, like Berkshire Hathaway, or Amazon.com, can cost thousands of dollars to own just one share.

However, if you only want to invest a fraction of that, brokerages will allow you to do so.

If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to ‘go short' a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource.

Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.

Price Action: According to data from Benzinga Pro, AMZN has a 52-week high of $201.20 and a 52-week low of $118.35. It’s currently up by more than 2%, trading at around $170.25 per share.

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