Fed Rate Hike Anticipation Weighs on Amazon Stock

Amazon shares are experiencing downward pressure as investors anticipate a rate hike by the Federal Reserve. Markets are pricing in a 92.5% probability of a rate increase, with traders assigning only a 33.1% chance just a month ago.

The Fed's decision is set to be announced on Wednesday, and higher rates tend to weigh on growth stocks by compressing their present value. Amazon has guided for substantial capital expenditures in its cloud and AI infrastructure buildout, and rising rates increase the cost of financing that spending.

Additionally, Amazon's cloud division, AWS, has disclosed it won't be able to bring its Bahrain facility back online or recover one of three data-hosting zones it operates in the United Arab Emirates. The damage was sustained during the Iran conflict, which left two of AWS's UAE sites hit directly and a nearby drone strike causing physical harm to one of its Bahrain locations.

On a more positive note, AWS has entered a multi-year partnership with AI coding startup Cognition to help businesses modernize legacy software using AWS infrastructure. This partnership is seen as a boost for Amazon in the tech sector, despite the challenges facing its shares.