Retail Stocks Rise as U.S. Consumers Continue to Spend Amid Economic Uncertainty

In Tuesday’s Morning Meeting livestream the CNBC Investing Club with Jim Cramer, a few key moments were discussed. Firstly, U.S. stocks slightly declined, with the S&P 500 down 0.2%, as bond yields rose due to positive September retail sales figures. Retail sales increased 0.7% on the month, surpassing the Dow Jones estimate of 0.3%, according to the U.S. Commerce Department’s monthly report. This news caused the yield on the 10-year Treasury to rise 9 basis points, reaching over 4.8%. The data indicates that American consumers are still willing to spend despite economic uncertainties, which may allow the Federal Reserve to maintain higher interest rates for a longer period.

In the wake of the positive retail report, several consumer stocks within the CNBC Investing Club performed well. Companies such as Constellation Brands (STZ), TJX Companies (TJX), and Costco Wholesale (COST) were among the outperformers. The focus on quality merchandise at value prices is expected to be a major theme this holiday shopping season, particularly benefiting off-price retailer TJX and Costco. However, ecommerce giant Amazon (AMZN) faced pressure on Tuesday due to factors beyond its role as a retail stock. UBS lowered its price target for Amazon to $178 per share, expressing concerns over slower growth in the company’s cloud business. Despite this, UBS maintained a buy rating for Amazon stock.

On Tuesday, semiconductor stocks experienced a decline following the U.S. government’s announcement of plans to further restrict the export of artificial intelligence chips to China. These measures specifically targeted Nvidia’s (NVDA) A800 and H800 chips, impacting the company’s shares which fell more than 4% in morning trading, reaching around $441 per share. Chipmakers will now be required to notify the U.S. government before selling chips that do not meet the controlled threshold. Nvidia has stated that it does not anticipate a significant immediate impact on its financial results, as global demand for its AI chips remains high. Nevertheless, the long-term implications for Nvidia’s business growth in the Chinese market are yet to be seen.

(Note: Jim Cramer’s Charitable Trust holds long positions in STZ, TJX, COST, AMZN, NVDA. For a comprehensive list of stocks, refer to this source.)

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