Amazon stock jumped in heavy volume in early trading as U.S. stocks rallied on comments from President Donald Trump that indicated the trade war with China could ease.
Trump told reporters late Tuesday that China tariffs will "come down substantially but won't be zero." Trump also said he wouldn't play "hardball" with China and that he had "no intention" of firing Fed chief Jerome Powell, a concern that had weighed on stocks in recent trading days. The Wall Street Journal reported Wednesday that Trump is considering slashing some tariffs on Chinese imports by more than half.
The current tariff of 145% on Chinese goods has dragged on Amazon's stock since Trump announced the plan earlier this month.
Raymond James analysts downgraded Amazon from a "strong buy" recommendation this week, noting that about 30% of Amazon gross merchandise value is "China-linked." Chinese sellers also account for about 15% of advertising purchases on Amazon's website, according to the note. Several other firms have lowered their price targets for Amazon stock in recent weeks, citing the tariffs and general economic uncertainty. There are also concerns that an economic slowdown would slow growth for Amazon's profit-driving cloud computing business.
Chief Executive Andy Jassy told CNBC last week that he expects sellers would pass on the cost of tariffs to Amazon customers.
Amazon stock is up 6.8% at 185.03 in recent action on the stock market today. Each of the Magnificent Seven tech stocks were showing solid gains Wednesday morning while the S&P 500 was ahead 3% in recent action.
Amazon Stock Retakes 21-Day Moving Average
With Wednesday's early gains, Amazon stock is trading above its 21-day moving average. The company's shares have not closed a trading day above that short-term trendline since March 27, according to MarketSurge charts by Investor's Business Daily.
Shares remain well below Amazon's longer-term 50-day and 200-day trendlines, however.
The current slump for Amazon stock began with its fourth-quarter results in early February, which beat earnings estimates but included a lower-than-expected sales forecast for Q1. Shares have tumbled 31% from a record high of 242.52 reached Feb. 4.
Amazon will report its first quarter earnings on May 1.
