Amazon’s innovation and game-changing supply-chain model have definitely produced dividends for the company. With its recent acquisition of Whole Foods, it has set its sights on the food industry. Shares of major food chains such as Kroger and Sprouts Farmers Market have been trading lower since June as a result.
Other hits to the Food sector can be seen in the falling stock prices of food giants such as Kraft Heinz, Post, and Kellogg, as well as the recent downtrend experienced by major packaged-food companies, which are also suffering due to lack of innovation. According to Zacks Equity Research, these companies have also been combating declining sales as they try to keep up with consumers’ shifting focus toward healthier and more cost-effective food options.
Now that Amazon is being added to this worrisome mix, these companies will be facing tougher battles both in brick-and-mortar locations and online. Steep price cuts to Whole Foods products will also add to Amazon’s arsenal.
Sectors: The leading Sector Benchmark ETFs exhibited relatively minor shifts over the past week. Utilities and Telecom rose, and Consumer Staples fell significantly. Momentum scores of most sectors increased for the week. The exceptions were Consumer Staples, Financials, and Discretionary. Consumer Staples fell into the red. The spread between the highest and lowest decreased from 54 to 48. In terms of ranking organization, there appears to be no general trend between cyclicals and defensive sectors. Technology (a highly cyclical sector) performed as well as Utilities (a typically defensive sector). Real Estate and Telecom were the only sectors to change from negative to positive for the week. Coupled with a mostly positive increase in momentum for most sectors suggests the potential for a market increase.
Utilities, Technology, Health Care, and several other sectors increased their momentum last week, while Energy and Discretionary are at the bottom of the sector rankings. The full effect of Hurricane Harvey will be shown in the coming weeks.
There are some specific concerns for certain sectors that may be affecting their rank. The overall demand of oil has affected the Energy sector, which has increased from -33 to -25.
Factors: The leading Factor Benchmark ETFs had mostly positive results for the week. Momentum and Low Volatility continued to be the top-ranked factors, and High Beta and Small Size are still at the bottom. Risk-off factors such as Quality and Yield are concentrated in the center of the rankings, but Low Volatility has continued to stay up. The overall momentum ranking for all factors increased last week, with the average momentum score changing from 0.6 to 2.3. The spread lowered from 29 to 25.
Global: Rankings in the leading Global Benchmark ETFs are also less clear about the sentiment of the market. China, Emerging Markets, and Latin America still lead the rankings, and their momentum scores have risen for the week. China’s momentum score rose from 42 to 44, while more developed markets such as the UK, which rose from -1 to 3, still are at the bottom. The average momentum score globally increased from 15.5 to 17.5. The US and the UK were at the bottom in terms of absolute rank. In developed markets, Japan decreased from 8 to 7.
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