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Investing.com – Amazon shined with its third-quarter earnings, helping Wall Street end the week on a positive note. The Fed’s preferred gauge is due at the end of the session, while rising tensions in the Middle East have lifted crude oil prices. Bank of Japan meeting is also possible next week.
1. Amazon shines in the third quarter
Amazon (NASDAQ:) was the latest of the major tech companies to report third-quarter results, and the e-commerce giant topped expectations as growth in its cloud business remained steady and advertising growth bounced back.
Revenue at Amazon Web Services, its cloud business segment, rose 12% to $23.1 billion, while advertising revenue rose 26% to $12.06 billion from a year earlier.
,[O]Your AWS growth remained steady, our advertising revenue grew strongly, and total operating income and free cash flow increased significantly,” said CEO Andy Jassy.
The company has sought to strengthen its cloud presence, taking on key rivals Google (NASDAQ:) and Microsoft (NASDAQ:), with a deal to invest up to $4 billion in chatbot-maker Anthropic, and expand its delivery network. Has also been reorganized. It fulfills orders faster and more cheaply than before.
With results due after the close on Thursday, its stock jumped more than 5% premarket, even as it warned consumers should be careful about spending in the holiday quarter.
“We still see customers remaining price-conscious, trading up where they can and looking for deals,” said CFO Brian Olsavsky.
2. Futures rise on strong Amazon data
US stock futures edged higher on Friday, ending a tough week on a positive note after e-commerce giant Amazon posted strong earnings.
At 04:40 ET (08:40 GMT), the contract climbed 107 points or 0.3%, gained 25 points or 0.6%, and was up 138 points or 1%.
The major indexes closed sharply lower on Thursday, with the tech-heavy decline 1.8%, on course for a weekly loss of nearly 3% and on pace for the third consecutive week of losses.
Broad-based closed the week 1.2% lower, down 2%, while the blue chip dropped 0.8%, its sixth negative session in seven, set for a weekly loss of 1%.
However, the mood changed on Friday after Amazon released strong data. [see above],
More earnings are due before the opening bell from oil giants Chevron (NYSE:) and Exxon Mobil (NYSE:) as well as consumer products company Colgate-Palmolive Co. (NYSE:).
3. The Fed’s Preferred Inflation Gauge Due
It is believed that the US may hold off on further interest rate hikes at its meeting next week, but an unexpectedly strong third quarter reading on Thursday has cast doubt on the December meeting.
That means Friday’s report on inflation will take on added importance as the readings are the Fed’s preferred inflation gauge.
Analysts expect September headline readings to rise 3.4% for the year and 0.3% for the month, while core PCE, which strips out fuel and energy prices, is expected to rise 3.7% for the year and 0.3% for the month. hopefully.
The Fed chair was at pains to say last week that upward-trending economic growth “could jeopardize the further progress of inflation and may require further tightening of monetary policy.”
With GDP data surprisingly moving upwards, any sign that inflation has started rising again could change the story regarding the Fed’s further decisions.
4. Fear of BOJ meeting
Central bank policy-making meetings will be held in the US, Britain and Japan next week. While the Fed gathering always attracts the most attention, it may be the officials who have the most time to discuss.
The Japanese central bank will face increasing pressure to move further away from its controversial bond yield controls amid rising global bond yields and persistent inflation.
The BOJ is laying the groundwork for an eventual elimination of negative interest rates, but the meeting is expected to be too early for such a move with BOJ Governor Kazuo Ueda warning of the consequences for slower global growth.
That said, the yen rose 3.3% on the year in October, consistently above the central bank’s 2% target, while the yen traded at 150 against the US dollar due to a widening gap between US and Japanese interest rates. Which is close to the lowest level in three decades. of 151.94 that prompted government intervention a year ago.
The weak yen boosts prices of imported food and fuel.
5. Crude surge due to US attack on Syria
Crude oil prices rose on Friday on concerns an escalating Israel-Hamas conflict is likely to impact supplies in the oil-rich region.
As of 04:45 ET, futures were trading 2% higher at $84.89 a barrel, while the contract climbed 2% to $89.70 a barrel.
Crude oil markets rose after the Pentagon confirmed that the US had struck two facilities in eastern Syria that it claimed were used by Iran’s Islamic Revolutionary Guard Corps, and that these were in Iraq and Syria. were in response to recent attacks on American troops.
The attacks raised concerns of a broader war in the Middle East, potentially affecting crude shipments from Saudi Arabia, the world’s largest oil exporter, and other major Gulf producers.
However, both benchmarks are still on track to post their first weekly decline in three weeks as the geopolitical premium built on these fears has diminished as there has been no disruption to oil supplies so far.