Wal-Mart Benefits From Bargain Hunters

It has been a good day for stocks and commodities. Major US indices like the Dow Industrials ended 52 points higher while S&P 500 added 5.11 points. With fuel and food prices going higher and higher, consumers are getting squeezed, opting for cheaper value household goods, clothing and groceries in lower-end shopping malls outlets. A major beneficiary of this change in shopping habit is the discount retailer Wal-mart. Wal-mart [[wmt]], the largest retailer in the world, reported Thursday that same store sales climbed 3.2%, more than its own forecast of a 3% gain and other analysts’ forecast of a 2% rise, sending its stock prices higher as a result. This increase in sales didn’t come easy for Wal-Mart; it had to adjust to slower consumer spending by cutting prices as much as 30% back in January in order to attract more bargain-hunters. Americans, in the process of receiving their checks electronically as part of the stimulus package enacted by US president Bush, are encouraged by the government to spend the extra money, and not just to use it all to repay their existing debts. For sure, Wal-mart and other retailers are hoping some of this money will go to them.

Meanwhile, commodities just keep going higher. Corn rose to a record high Thursday on concerns that rainy weather in the US, which is the world’s largest grower and exporter of corn, will disrupt planting work and thus limit corn production. Corn futures for July delivery rose 17.25 cents, or 2.8%, to $6.3025 a bushel on the Chicago Board of Trade. Grain traders will be looking forward to Friday’s supply-and-demand report from the US Department of Agriculture. Many are expecting the report to show a sharp fall in corn stocks for the 2008-2009 marketing year to 707 million bushels.

To the dismay of consumers, crude oil rose to another record high, rising above $124 to $124.61 a barrel for the first time ever. Crude oil for June delivery closed at $123.69 a barrel, the highest closing price since trading started in 1983. And it’s not just crude oil which is making record highs, but also gasoline and heating oil.

Posted in Categories: Commodities, Stocks.

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