Why Amazon Stock Is Sinking Today

Amazon (NASDAQ: AMZN) stock is retreating in Friday's trading. The company's share price was down 3.5% as of 3:10 p.m. ET amid a 1.7% decline for the S&P 500 (SNPINDEX: ^GSPC) and a 2.2% decline for the Nasdaq Composite (NASDAQINDEX: ^IXIC).

Amazon's valuation is moving lower today in conjunction with bearish macroeconomic data. With today's pullback, the company's share price is now down roughly 2% across this year's trading.

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Amazon stock stumbles as bearish macro indicators mount

Investors are selling out of stocks today following a new round of macroeconomic data that paints a more challenging backdrop for equities.

The University of Michigan's Consumer Sentiment Index fell 10% on a sequential monthly basis to a score of 64.7 in January -- with concerns about potential inflationary impacts from new tariffs driving the move. Existing-home sales also dropped in January, and the U.S. Services Purchasing Managers Index is now showing a decline for February.

Today's bigger pullback comes on the heels of substantial sell-offs kicked off by Walmart's disappointing guidance yesterday. While the company posted annual sales growth of 5.6% in its last fiscal year, it anticipates that sales will only grow between 3% and 4% this year.

What's next for Amazon?

Weakness in the consumer and services segments of the U.S. economy could mean a stunted growth outlook for Amazon. Macroeconomic headwinds could also cause investors to become broadly more cautious and assign significantly lower valuation multiples for growth stocks.

On the other hand, Amazon's long-term outlook continues to be very promising. With the company likely still in the very early stages of reaping the benefits of artificial intelligence (AI) when it comes to its cloud infrastructure and e-commerce business, the stock continues to offer attractive long-term upside. So while macroeconomic headwinds could continue to drive volatility in the near term, buying shares when pullbacks hit continues to look like a smart move for long-term investors.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy.