Stocks higher on data and earnings (10/14/16)
Stocks climbed today on positive earnings reports and stronger-than-expected economic data.
The Dow added 39, with 21 of its components advancing; the S&P 500 Index edged up 0.43; and the Nasdaq gained 0.83. Advancers outpaced decliners by almost eight to seven on the NYSE and were even on the Nasdaq. Treasury prices weakened. Gold futures lost $2.10 to close at $1,255.50 an ounce. Crude-oil futures slipped $0.10 to settle at $50.75 a barrel.
For the week, the Dow fell 0.55%, the S&P 500 Index lost 0.95%, and the Nasdaq dropped 1.48%.
In other business news:
- Retail sales climbed 0.6% in September, according to the Commerce Department. That’s the largest increase in three months. Core retail sales, which excludes automobiles, gasoline, building materials, and food services, increased 0.1%. Economists had forecasted a 0.6% jump in the overall number and a 0.4% increase in core sales.
- Higher costs for energy and food drove U.S. wholesale prices higher in September. The producer price index rose 0.3% in September, according to the Labor Department, the first gain in three months. Economists expected an increase of 0.2%.
- U.S. business inventories grew by 0.2% in August, according to the Commerce Department. The number was in line with economists’ forecasts.
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Grocery stores are having a tough time lately, as competition heats up and sales cool down. According to consulting company Kantar Retail, food and alcohol sales in physical stores are only expected to grow 3% over the next five years. But online sales are expected to jump 34%.
In 2014, e-commerce sales for traditional food and beverage stores totaled $1 billion—just 0.16% of the $670 billion market, according to the Commerce Department.
In contrast, look at online retailers like Amazon Fresh and Peapod, which brought in $6.7 billion in 2014, up 20% from the prior year.
It’s only natural that stores like Wal-Mart and Kroger have decided to shift their efforts online. But instead of investing in expensive delivery services, they’re betting on curbside pickups, or “click and collect.”
By the end of next year, Wal-Mart says it will offer pickup service in 1,000 of its 4,600 stores. The company also announced that it plans to open less than half the number of supercenters it did this year and will increase spending on e-commerce sales.
But the competitive landscape just got a little more crowded.
Amazon announced this week that it’s opening up its own line of convenience stores where shoppers can buy fresh goods and order groceries for same-day delivery. The company will also have drive-in locations where customers can pick up items they’ve ordered online. It may seem a little out of Amazon’s wheelhouse, but the company sees it as a tremendous growth opportunity. U.S. households visit a grocery store one-and-a-half times a week on average, and overall, groceries make up about a fifth of consumer spending.
If we move to online grocery shopping, do impulse buys disappear? They always say you shouldn’t shop on an empty stomach. And there are plenty of studies that say that we tend to eat more when we’re sitting in front of our computer. That means if we shop for food online, we’ll never shop when we’re hungry, right? Unfortunately, a full stomach isn’t going to prepare me for Amazon’s recommendations. “People who bought milk also bought the Captain America: Civil War DVD.” Or “People who bought eggs also bought this 50” flat screen TV.” Grocery shopping with Amazon is a tremendous growth opportunity alright—for my credit card bill.
