Amazon.com Inc’s (AMZN) shares experienced a significant surge on Thursday, driven by a confluence of positive factors. The stock’s upward trajectory appears to be fueled by robust consumer spending data coupled with an upbeat outlook from retail giant Walmart Inc (WMT).
According to data released by the Census Bureau on Thursday, retail sales experienced a noteworthy jump of 1% month-over-month in July. This exceeded economists’ expectations of a more modest 0.3% increase. Furthermore, retail sales climbed 2.7% on a year-over-year basis, representing a notable improvement from the downwardly revised 2% growth observed in June. These figures underscore the resilience of consumer spending, a key driver of economic growth.
Further bolstering investor confidence, jobless claims also dipped to their lowest levels in five weeks, easing concerns over a potential weakening of the labor market. Initial jobless claims for the week ended August 9 came in at 227,000, falling below economists’ estimates of 235,000 and marking a decrease from the previous week’s figure of 234,000. The four-week moving average for weekly jobless claims also trended downwards, settling at 236,500, down from 241,000. Continuing claims also exhibited a decline, dropping to 1.864 million from a revised 1.871 million, highlighting a strengthening labor market.
Adding to the positive sentiment, Amazon shares may also be benefiting from the recent strong performance of Walmart. Walmart reported better-than-expected results for the second quarter and raised its full-year outlook. The company’s revenue surged by 5% year-over-year to $169.335 billion, outperforming estimates of $168.569 billion. Walmart also reported adjusted earnings of 67 cents per share, exceeding analysts’ expectations of 64 cents per share. The company’s positive outlook for the year ahead, with projected sales growth ranging from 3.75% to 4.75% and earnings estimated to be between $2.35 and $2.43 per share, further boosted investor sentiment. This revised outlook surpasses Walmart’s prior projection of earnings between $2.23 and $2.37 per share.
In an interview with CNBC following the release of these strong financial results, Walmart CFO John David Rainey offered insights into the company’s performance and the prevailing consumer sentiment. Rainey highlighted the consistency of consumer behavior throughout the quarter, with each month exhibiting relatively similar patterns. He also noted that the back-to-school season had gotten off to a “pretty good start”. Rainey further stated that despite consumers’ focus on value and essential items, there was no evidence of a decline in consumer health. This reassurance from a major retailer provides further confidence in the strength of the consumer spending environment.
As of publication, Amazon shares were trading up 2.93% at $175.09, reflecting the positive market response to the combination of strong economic indicators and upbeat corporate performance.
