Retail Sales Surprise; Amazon Near Buy Point

Retail sales rose 0.7% in August from the prior month despite the chip shortage and Covid upsurge, the Commerce Department reported. Excluding autos, retail sales climbed 1.8% on the month, led by a 5.3% rise for nonstore retailers like Amazon (AMZN). Dow Jones futures and the broad market firmed up after the data, with the Dow turning positive, though Amazon stock pointed slightly lower ahead of the open.


Wall Street economists expected retail sales to fall 1.1% overall, while dipping 0.1% excluding autos.

The retail sales strength in August was only partially offset by downward revisions to July data.

Retail sales for July were revised down to a -1.8% from the -1.1% initial reading overall. Ex-autos, July retail sales were down 1% vs. the initial report of -0.4%.

After a spring surge fueled by stimulus, retail sales had downshifted, partly because consumers spent more on entertainment and travel. Now some of that services spending may be flowing back to retail, especially online sellers like Amazon. However, September could see another soft month amid expiration of emergency jobless benefits.

Dow Jones, Treasury Yield Reaction To Retail Sales

After the retail sales data, Dow Jones futures rose 0.1% in Thursday stock market action. S&P 500 futures lost a fraction and Nasdaq 100 futures 0.3%.

The Dow Jones finished Wednesday about 2% below its record Aug. 16 close. The Dow is still up nearly 14% for the year.

The S&P 500 closed 1% below its Sept. 2 record, up 19% for the year. The Nasdaq, which has been leading the market higher since May, is 1.4% below its Sept. 7 record and up 17.6% this year.

The 10-year Treasury yield rose about 4 basis points to 1.34% early Thursday.

Retail Sales Details

Auto sales fell 3.6%, as chip woes limited production. Electronics store sales declined 3.1%.

Sales at food service and drinking places were flat on the month, though up 31.9% form a year ago.

Besides online, other strong categories included grocery stores, up 2.1%, and general merchandise stores, up 3.5%.

Amazon Stock, Other Top Retail Stocks

Wednesday’s rally included a move by Amazon stock above its 50-day moving average. AMZN stock now has a 3550.09 cup-with-handle buy point. Amazon stock lost a fraction early Thursday.

The IBD 50 list of market-leading stocks includes Williams-Sonoma (WSM).

Crocs (CROX), which gets about half of revenue from direct sales, is on IBD Leaderboard, as well as the IBD 50. CROX stock jumped this week on bullish guidance and an accelerated stock buyback.

Top-performing retail industry groups include Retail-Major Discount Chains, led by Costco (COST) and Target (TGT), followed by Walmart (WMT). Costco is still trending higher with earnings next week. Target stock and Walmart are in bases.


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