On a day that saw market circuit breakers triggered to keep stocks from falling through the floor, shares of retail giant Walmart Inc. (NYSE:WMT) were bucking the trend and rising 2% in midday trading.
Investors were betting plunging oil prices would put more money in consumers' hands just as they were looking to stock up on sanitizers, cleaning products, canned goods, and other merchandise that would allow them to hunker down if necessary.
Over a barrel
Saudi Arabia launched an all-out price war on oil after failing to convince OPEC nations and Russia to limit production to keep prices elevated. The price of crude oil plunged 20% to $36 a barrel, promising a glut of oil on an already weak market.
Yet that could be a boon to consumers who would see more money in their pockets as the spread of the COVID-19 virus had customers clearing shelves of hand sanitizers and other cleaning products. Supermarket chains like Kroger and Publix began rationing hand sanitizer and companies are calling for the U.S. Attorney General to ban price gouging on essentials.
Walmart is seen as a defensive consumer stock largely immune to economic upheavals. Analysts at Cowen & Co. point out the retail giant was the least affected retailer during the last recession. Where the average stock price was down 31%, Walmart's stock rose 2%.
The retailer might also get some relief from lower expenses for fuel and transportation costs.