Stock indices in the US fell on Friday, as investors reacted to high spending and weak results from Amazon, the nation's leading online retailer.
Friday, July 25, 2014
Though the firm's net sales rose 23% to $19.34 billion in the quarter ending June 30, 2013, it shifted to an operating loss of $15 million in Q2 2014, a far cry from Q2 2013's operating income of $79 million.
"We continue working hard on making the Amazon customer experience better and better," Jeff Bezos, the company's founder and CEO, said in the earnings release.
Markets react to Amazon news
Just before 10 a.m. Friday morning, the S&P 500 had slumped 7.14 points to 1,980.84, while the Dow Jones Industrial Average dropped to 16,968.66, a slide of 105.12 points.
Amazon's losses arose as a result of heavy investment along numerous vectors, including new services, a greater focus on the Prime membership program and Amazon's massive cloud-computing and server business, which now represents one of the Seattle company's core capabilities.
According to the Financial Times, analysts from the Evercore advisory firm said they "are cutting our 2014 and 2015 margin assumptions until we see a sign of inflection in this investment cycle, which is safe to describe as a war being waged on multiple fronts."
Hedging the bear market
A relatively strong earnings season has helped bolster equity prices, which are up about 1% in the last month despite strong headwinds in the form of political crises in Ukraine, the Gaza Strip and Syria.
Amazon is such a massive presence, however, that it was able to strip some of the momentum from this charge. One good way to hedge against such adverse events is to employ binary options as part of a daily strategy, selling contracts against a defined drop in US index prices.
If the index stands below a certain figure at a certain time, the contract will pay out in full, creating profit equal to the difference between the purchase price and the full 100-point value of the contract.
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