Why Amazon Stock Dropped Today
Shares of Amazon (NASDAQ: AMZN) fell on Tuesday after interest rates rose and an analyst warned that rising labor costs could pressure the e-commerce giant's profits.
As of 2:45 p.m. EDT today, Amazon's stock was down 2.5%.
Growth stocks like Amazon are valued based upon their expected future earnings and cash flows. When interest rates increase, investors typically discount their profit projections at a higher rate to account for the larger yields they can earn on bonds and other fixed-income investments. This often leads investors to place a lower present value on growth stocks.
Source Fool.com
