The Next E-Commerce Frontier
Stocks are sprinting higher after shaking the bad vibes from their second-worst May performance since the 1960s.
The S&P 500’s 1% surge on Friday capped off four-straight days of gains and helped push the averages to their best performing week of the year. The Dow added more than 1,100 points during last week’s comeback rally, while the tech-heavy Nasdaq Composite jumped nearly 4% on the week.
More importantly, the S&P successfully tested longer-term support just below 2,750. The picture-perfect bounce that followed has already erased most of the May swoon.
Even a weaker-than-expected jobs report on Friday couldn’t keep the buyers at bay. The economy added just 75,000 in May, throwing more fuel on the rate-cut fire. For now, the market wants us to forget about the global economic slowdown fears that have rippled through the financial press for the better part of the last 12 months. The path of least resistance is now higher.
Tariff Man is also helping the rally extend into the new trading week. Futures are higher early this morning following Trump’s announcement that a deal with Mexico is complete, lifting another threat weighing on the markets.
If these pre-market gains hold, stocks will enjoy a strong start to the week as the major averages look to extend their gains to five trading days in a row.
Even some of the market’s most pathetic stocks are enjoying strong rallies this month.
Beleaguered bookstore Barnes and Noble Inc.’s (NYSE:BKS) slow slog into irrelevancy was interrupted last week as after Elliott Management announced it would purchase the firm for a cool $683 million, according to CNBC.
After suffering at the hands of the Amazon revolution for years, Barnes and Noble shares enjoyed a moment in the spotlight late last week, jumping more than 50% off their lows.
Barnes and Noble has had a rough go of it in the age of Amazon Prime. The stock had lost more than $1 billion in market value over five years. Before last week’s buyout-induced surge, shares were down 25% on the year. Its market value was circling the metaphorical toilet until the Elliott Management buyout swooped in to save the day.
Bottom line: I doubt this buyout will help Barnes and Noble compete with Amazon. That ship has sailed.
There is one company preparing to fight the battle of the century against the Amazon juggernaut: Walmart Inc. (NYSE:WMT).
Walmart stock jumped almost 5% last week to post new all-time closing highs.
But the company has its sights on a much bigger goal: beating Amazon at its own game. You might remember how Walmart recently beat earnings expectations by a wide margin, posting its strongest sales growth in nine years. More importantly, e-commerce sales were booming, growing 21% during the fourth quarter, compared to Q4 2017. Management said online sales were on fire thanks to the expansion of grocery pickup and delivery — as well as better offerings available at Walmart.com.
Now, Walmart is going all-in on the grocery game by testing home delivery. During the home delivery rollout, Walmart employees will put your groceries away for you while you’re out of the house. Kansas City, Pittsburgh, and Vero Beach are the first cities to be offered in-home delivery.
While I wouldn’t blame you for being skeptical of this new program, it’s much more organized than a random Walmart employee breaking into your house and throwing groceries in your fridge.
Once you sign up for in-home delivery, Walmart will install a smart-lock on your home that allows an employee to enter your kitchen or garage. Every delivery person will be equipped with a body camera that allows not only Walmart to monitor what’s going on, but also allows you to watch your groceries arrive in real-time.
I have no idea how the test-run of this new delivery system will pan out. But if Walmart can crack the grocery delivery nut, the company could get a major leg up on Amazon.
We’ll take a closer look at the ever-expanding Walmart vs Amazon conflict over the next several weeks — including which stock has a better chance at delivering the biggest gains over the next five years.