A surprising surge in U.S. retail spending in September helped push the Dow Jones Industrial Average (DJINDICES:^DJI) higher on Friday. Total retail sales rose 1.9% in September compared to August, well ahead of the 0.8% gain expected by economists. The strongest categories included clothing, sporting goods, and motor vehicles. The Dow was up about 0.8% at 1:20 p.m. EDT.
Rising along with the Dow were Walmart (NYSE:WMT) and Boeing (NYSE:BA) stocks. Walmart got a boost from an analyst “buy” rating, and shares of Boeing surged after Europe’s top aviation safety regulator called the 737 MAX safe to fly.
Analyst optimism for Walmart
Walmart’s investments in various e-commerce initiatives, including free two-day shipping and online grocery shopping, paid off big time during the pandemic. The company experienced robust sales growth in the second quarter, with U.S. comparable sales up 9.3% and U.S. e-commerce sales soaring 97%.
Jefferies analyst Stephanie Wissink sees these trends continuing to drive Walmart’s results. Jefferies rated Walmart stock a “buy” on Friday and attached a base case price target of $165, with a bull case price target of $180. Wissink expects Walmart to increase its share of consumer spending through its omni-channel initiatives, partnerships, and services.
On the services front, Walmart launched its Walmart+ membership program last month. For $98 annually or $12.95 monthly, members receive unlimited same-day delivery of groceries and select general merchandise. With consumers turning to grocery pickup and delivery services during the pandemic, Walmart+ could be a big winner for the retailer.
One wrinkle in this optimism is the impact of economic stimulus on Walmart’s results. The $2.2 trillion CARES Act sent checks to Americans and boosted unemployment benefits for months, driving consumer spending during the worst of the pandemic. Walmart’s sales growth began to slow after those benefits lapsed,