Seizing Opportunities in Rallying Consumer Staples Stocks
The typically sleepy consumer-staples stock sector has been having a moment lately. The S&P 500’s consumer staples sector has risen 6% since August and has increased 16% year-to-date. $Walmart (WMT.US)$, $Costco (COST.US)$, $Philip Morris International (PM.US)$ and $Coca-Cola (KO.US)$ all reached all-time highs during Tuesday's trading session.
![Seizing Opportunities in Rallying Consumer Staples Stocks](https://ussnsimg.moomoo.com/sns_client_feed/77777017/20240828/53ad1bef067629420982d9c50d458992.png/big?area=100&is_public=true)
Source: S&P Global
![Seizing Opportunities in Rallying Consumer Staples Stocks](https://ussnsimg.moomoo.com/sns_client_feed/77777017/20240828/0433618fba493392016a9eb9edc60493.png/big?area=100&is_public=true)
What is driving the outperformance of consumer staples?
Strong retail sales data and corporate earnings
The July retail-sales report helped assuage concerns about a slowdown in spending. Sales at U.S. retailers last month surged 1%, registered their biggest increase in a year and a half.
Meanwhile, retailers’ strong earnings send a positive signal that could help lift the broader market, as investors saw when $Walmart (WMT.US)$ beat estimates and raised its outlook, citing stable consumer health.
In addition, $Target (TGT.US)$ posted a 2% rise in comparable sales for its second quarter, marking the first increase in over a year. $TJX Companies (TJX.US)$, owner of discount stores Marshalls and TJ Maxx, also exceeded expectations with a 4% rise in comparable sales.
$Walmart (WMT.US)$ has risen more than 46% year-to-date, $Costco (COST.US)$ and $Coca-Cola (KO.US)$ have increased by 38.3% and 23.2% respectively so far this year. Other retail giants such as $Unilever (UL.US)$ and $Colgate-Palmolive (CL.US)$ have risen more than 35%, while $Procter & Gamble (PG.US)$ has increased by 17.68%.
![Seizing Opportunities in Rallying Consumer Staples Stocks](https://ussnsimg.moomoo.com/sns_client_feed/77777017/20240828/1563e2c1e9ae144a7f2d75f8aeaa4e2d.png/big?area=100&is_public=true)
Fed interest rates cut
According to Callie Cox, chief market strategist at Ritholtz Wealth Management, consumer staples stocks been caught up in growing demand for dividend stocks and other interest-rate-sensitive names as traders brace for the Fed to cut interest rates.
“Even though they are traditionally defensive stocks, we’ve seen investors treat consumer staples as a more offensive strategy as rate cuts come into view,” Cox said.
“Now is a good moment to realize that defensive stocks aren’t defensive in every environment,” she added. “Sometimes, they can be opportunistic.”
Source: MarketWatch, CNBC
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