Suddenly there seems to be bad news from every sector of the market. While technology stocks continued to slide, oil producers finished the past week with their share prices collapsing. It could be we’re seeing the wind-down of one of the longest bull runs in US history.
With about $3 trillion of US stock valuation wiped out since the September peak, investors have no clue how 2019 might be shaping up. Though we’ve just seen above-trend growth, tax cuts, record stock buybacks and still strong profits, the macro environment is worsening, all of which is producing a serious level of uncertainty for investors.
And unless there’s a quick resolution of the US-China trade war and some signs that inflationary pressures are abating, equity markets are likely to trade lower. During the coming week, investors will receive additional clues about the health of US retailers when reports of Black Friday sales are released.
With oil prices continuing to plunge, there could also be another bout of selling pressures in some of the top oil producers. Here are 3 stocks worth keeping an eye on during the coming week’s trade:
The world’s largest e-tailer, Amazon.com (NASDAQ:AMZN), is well positioned to benefit from this year’s Black Friday shopping mania. The National Retail Federation predicts some 164 million Americans will shop during the five-day Thanksgiving break which runs from Thursday through Monday.
According to NRF estimates, online and in-store sales in November and December are expected to increase as much as 4.8% to $720.89 billion, compared to the same period in 2017. Though that’s less than last year’s 5.3% gain, it’s still well ahead of the 3.9% average increase over the past five years.
The early numbers suggest that American shoppers remain willing to spend and the equity market negativity hasn’t yet gripped consumers. “This Black Friday is already on pace to surpass Black Friday last year in terms of items ordered,” according to a statement from Amazon. “In just the first nine hours of Black Friday, Amazon customers have ordered more than 1 million toys and more than 700,000 fashion items.”
The world’s largest brick-and-mortar retailer, Walmart (NYSE:WMT), is another stock to keep an eye on for clues about US consumers and the health of the retail sector as we approach the major holiday shopping season. Robust sales for the week of Black Friday will confirm that spending remains strong. That in turn will be reflected in the big-box retailer’s fourth quarter earnings report which is expected to occur in mid-February 2019.
Walmart shares have outperformed the S&P 500 during the past three months, a result of the company’s safe haven status during times of distress. The biggest challenge for Walmart is to continue improving its online sales as a way to grab a bigger share of growing number of shoppers who don’t want to set foot in stores.
In the latest quarter reported, numbers showed that Walmart’s online strategy is winning: e-tail sales rose 43% over the same quarter a year earlier. Investors certainly don’t want to see any slowdown on this key metric during the holiday season. This would create doubts about Walmart’s growth prospects in the US and cast a shadow on the company’s ability to manage its massive investment in Indian e-commerce giant Flipkart.
Following a sharp plunge in oil prices this past month, oil production majors have been under pressure. On Friday, West Texas Intermediate futures fell more than 6% to $51.03 per barrel, reaching their lowest level of the year.
After falling more than 4% in the past week,The largest US producer, ExxonMobil (NYSE:XOM) may see further weakness in its share price, which fell more than 4% during the past week. If oil prices continue their downward spiral, it will undoubtedly weigh on shares of all oil producers.
Ahead of the G20 summit in Buenos Aires which starts on November 30, investors are unlikely to get any clarity on the direction of the oil markets before the G20 summit in Buenos Aires starting Nov. 30 where the key decision makers in the oil markets are set to gather on the sidelines. Additional clarity could come a week later, on December 6, when OPEC and non-OPEC producers gather in Vienna.