Amazon up on buy recommendation

Amazon.com (AMZN) shares soared 20.3 percent today after an investment firm initiated coverage with a "buy" recommendation.

The stock rose in trading all the way up to the final bell. It closed at 22-15/16 today, up 3-7/8 from yesterday. The markets closed early, at 10 a.m PT, due to the holiday weekend.

Amazon's share price nearly reached the level it set at the close of its first day of trading, 23-1/2. Amazon set an IPO price of $18 a share.

Volume was heavy with over 1 million shares trading hands, more than triple the stock's average daily trading since the online bookseller went public in May.

Christopher Feiss, an analyst with Alex. Brown, initiated coverage on the company with a "buy" rating in a report released yesterday on First Call.

A company spokeswoman said Amazon has not put out any news releases and does not know why the stock jumped today, but noted that the markets in general had a good day.

The Dow Jones Industrial Average gained over 100 points after economic reports showed that inflation and a short-term interest rate hike are not on the horizon. The Dow closed at another record high of 7896 and the Nasdaq gained 12 to 1468.

Amazon.com's stock price has been on a roller coaster ride since its IPO. The company hit a high of 30 on the first day of trading and then dropped to its low of 15-3/4 just one week later.

Since then the ups and downs of competition, price cuts, and analyst recommendations have played havoc with the price.

In June, less than one month after becoming a public company, Amazon.com announced big price discounts on its books, pushing the stock down. Discounts can have an averse affect on future revenue and that can make investors wary; the stock fell 1-1/4 to 19 on the news.

The bookseller has faced increasing competition from online competitors as well traditional brick-and-mortar book stores that want a piece of the growing Net commerce market.

Just days before Amazon.com's IPO, Barnes & Noble (BKS) opened its own Web site featuring author chat sessions, book reviews, commentary, book excerpts, audiovisual effects, and author biographies.

And one day after Amazon.com's IPO generated $54 million, another Internet bookstore cut its prices. Book Stacks Unlimited, known as Books.com, chopped 40 percent off the suggested retail price for all New York Times bestseller books and discounted a majority of the titles in its database by 15 percent.