Amazon.com Inc. reached a new milestone, with its market capitalization exceeding $3 trillion for the first time. This surge came after the company reported adjusted earnings per share of $1.97, beating analyst estimates of $1.82 per share. Revenue also surpassed expectations, reaching $200.61 billion against a forecast of $196.47 billion, largely due to a significant increase in cloud growth during the second quarter. Shares of Amazon were up roughly 4% following this news.
The broader market also experienced a rally, with the S&P 500 rising 1.2% and the Nasdaq composite up 2%. This positive momentum was fueled by several factors, including solid corporate earnings and a significant drop in oil prices. US crude, specifically Brent crude, fell below $80 per barrel, with a 4.7% decline to $83.83, after President Donald Trump indicated a halt to new strikes against Iran and hopes for renewed diplomacy. This decline in oil prices helped alleviate inflation concerns and eased pressure on Treasury yields, with the 10-year Treasury yield sinking to 4.69% from 4.75%.
The market's improved risk appetite also saw both small caps and megacaps rally. Analysts noted that the market has absorbed significant events like Federal Reserve actions, inflation, and earnings without breaking down, suggesting it might be laying the groundwork for a new breakout. However, the on-again, off-again nature of US-Iran diplomacy means that earnings and jobs data will be crucial for sustaining the bullish sentiment.
