2024-07-19 07:00:00 ET
Summary
- Amazon Prime Day set records - the two-day event generated +$14B in online sales.
- Consumer Discretionary stocks surged in the past month on cooling inflation and are well-positioned to benefit from a Fed pivot on interest rates.
- Investors can gain exposure to this sector through a wide variety of stocks that stand to gain from a boost in non-essential spending.
- Amazon stock has increased ~40% over the last year, yet significantly lags Magnificent Seven peers and top consumer discretionary, Abercrombie & Fitch, over the last 5Y years.
Prime Day 2024
Amazon's ( AMZN ) Prime Day set records with the two-day event delivering over $14B in sales, offering exclusive deals to Amazon Prime members, with savings on popular and best-selling items including electronics, apparel, home goods, and more. One of the Magnificent Seven stocks , Amazon's market capitalization is nearly $2T, and together with its Mag 7 peers comprises nearly one-third of the S&P 500, over 40% of the Nasdaq 100, and more than 20% of the MSCI World. Over the last year, Amazon stock is up ~40% and has consecutively surpassed earnings expectations for the last five quarters. However, Amazon has significantly lagged behind its Magnificent Seven peers in performance over the last five years, in addition to a top Quant-rated mid-cap consumer discretionary stock, Abercrombie & Fitch ( ANF ).
5-Year Magnificent 7 Performance vs. Abercrombie & Fitch Stock
Mag 7 vs. ANF 5Y Performance (SA Premium)
Cooling inflation is potentially paving the way for near-term interest rate cuts and could possibly be a positive trend for consumer discretionary stocks. Historically, consumer discretionary stocks outperform in low interest rate environments and increase in non-essential spending, as evidenced by record retail sales in this week's Amazon Prime Day event. US core inflation eased to its slowest pace since 2021, boosting the odds of Fed cuts beginning in September. Increasing odds of imminent Fed cuts have also sparked a rotation out of the tech-heavy Magnificent Seven....
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Amazon Prime Day Breaks Records: Why Abercrombie Is The Bigger Bargain (SA Quant)