The Labor Market Continues to Deteriorate and AMAZON Is Doing Its Part

While this note will focus primarily on Amazon—following the company’s earnings release after yesterday’s market close and the subsequent 10% decline in after-hours trading—it is impossible not to briefly address the broader market dynamics observed in the previous session, which was characterized by a pronounced risk-off move across asset classes.

Starting with commodities, precious metals experienced sharp declines: silver fell by -25% and gold by -6%, although gold increasingly appears to be trading as a distinct asset class. Bitcoin, meanwhile, briefly approached the $60,000 level, but is now down roughly -30% over the past week. Equities were no exception to the sell-off, with all major U.S. indices closing near their session lows, down approximately 1.2%.

One data point significantly worsened the backdrop during the U.S. morning session: Challenger Job Cuts—tracking announced layoffs in January—came in at three times the prior reading and at levels last seen in 2009, during the height of the Global Financial Crisis, at +108,000. This was followed by weaker-than-expected figures for both JOLTS Job Openings and Initial Jobless Claims. Taken together, these releases are beginning to paint a decidedly deteriorating picture of the U.S. labor market.

The sell-off in technology stocks and the wave of layoffs tie in closely with Amazon’s situation. Last month, the company announced an additional 16,000 job cuts, on top of the 14,000 announced in October. In just four months, Amazon has laid off roughly 30,000 employees, almost entirely white-collar roles. After the close, earnings disappointed the market: while revenues from both advertising and AWS exceeded analysts’ expectations, earnings per share fell short. More importantly, capital expenditures stood out negatively, with management guiding to approximately $200 billion for the current year, versus analyst expectations of around $146 billion.

This highlights the recurring theme currently weighing on Big Tech valuations: while the long-term potential of artificial intelligence is broadly acknowledged, investors are increasingly questioning whether the level of investment required to build and sustain these capabilities is economically sustainable at such elevated levels.

Amazon, which has already declined approximately 14% from its late-October highs—falling from $259 to $222.69 at yesterday’s close—is set to open around the $ 200 level based on after-hours price action, implying a further downside of roughly -10%. The most recent close corresponds to the lower boundary of the upward regression channel in place since early 2023. Today’s opening is expected to be very close to what can be considered the final “line in the sand”: the long-term trendline connecting the start of the move near $80 with the April 2025 lows around $165. Overall, it appears that Amazon is increasingly losing investor confidence.