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Amazon, Apple raise hopes as investors brace for slowdown
Global Banking & Finance Review®
Company
By Eva Mathews
(Reuters) – Apple and Amazon added about $175 billion to their combined market value on Friday after upbeat results boosted investor confidence on the ability of these firms to weather a slowdown in the economy.
While analysts noted these companies were not completely immune to broader economic hurdles, they said the weakness in consumer spending is not likely to send these firms into the red, deeming them “always reliable to buck the trend.”
Amazon’s shares rose about 11% to $135.50 after the e-commerce titan forecast upbeat third-quarter revenue, while those of Apple rose more than 3% as the company said appetite for iPhones remained strong despite consumers tightening spending.
“The results are good enough to support Apple’s stock which has done much better in the current market rout, further justifying the company’s ‘safe haven’ status when the going gets tough,” Haris Anwar, Investing.com analyst, said.
The U.S. stock market’s hyper surge in the past decade has been fuelled by high-growth and megacap companies, but rising interest rates to combat decades-high inflation as well as a sharp rally in the dollar have taken a toll since the start of the year.
Earlier this week, upbeat results from Alphabet and Microsoft reassured investors burnt by a slump in their shares in the first half of the year.
Amazon, like much of the retail industry, is bracing for a pullback in consumer spending as people stick to lower-priced essentials to tide over economic woes.
The e-commerce giant’s booming cloud business, coupled with a ramp up in service offerings, is likely to help cushion the impact of soaring costs.
Kingsview Investment Management portfolio manager Paul Nolte, however, was more skeptical in the light of warnings from some major retailers including Walmart.
“We think that the consumer is not as strong as maybe portrayed by the reaction to Amazon.”
(Reporting by Eva Mathews and Aniruddha Ghosh in Bengaluru, Graphic by Akash Sriram; editing by Ankur Banerjee and Saumyadeb Chakrabarty)
Consumer spending refers to the total amount of money spent by households on goods and services. It is a key driver of economic growth and reflects consumer confidence in the economy.
Market value is the total worth of a company as determined by the stock market. It is calculated by multiplying the current share price by the total number of outstanding shares.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage. They are influenced by central banks and affect economic activity.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
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