Triple witching drove trading volume higher today but the overall action in stocks ended on a decent note. After opening on the downside the Dow worked its way up and closed with a 24 point gain to 21,384. For the week the Dow was up about 0.06%.
Amazon eats the world. The Seattle based online retailer/tech/logistics/entertainment company made a big move into the traditional grocery store space today by purchasing Austin TX based grocer Whole Foods for $13.7 billion. Some people refer to Whole Foods as “Whole Paycheck” because they tend to price things a little higher. The gurus cheered the move and other grocery store stocks fell in price fearing the prospect of having to compete with a company like Amazon that is not afraid to give bananas away for free. Costco, which some consider immune from Amazon, fell hard on the news as did Kroger. Grocery stores have been struggling lately thanks to food deflation and today’s news adds another element of risk and disruption to the grocery business.
Housing starts in May came in below estimates by falling 5.5% to an annual rate of 1.09 million units. The reading was lower than even the worst guru estimates but this does not signal the housing recovery is over. Starts are still up 8.5% from a year ago and based on scrappage and population growth, housing starts are projected to eventually rise to 1.5 million units per year. Also the mix of housing is changing as more single family homes are being built in a shift away from multifamily units. Housing completions were up 5.6% in May and are now up 14.6% year over year as builders focus more on completing projects instead of starting new ones.