For most of the last three months there's been a weather-related asterisk next to nearly every economic and company data point given to the market. Employment, GDP, retail sales, earnings, and just about anything else either was or could have been affected by the winter freeze that hit the East Coast, which created a cloud around the numbers.
Now that most of the snow is gone, data will start reflecting a more normalized economic picture, which investors hope was the case today when the Commerce Department said retail sales were up 1.1% in March on a month-over-month basis. That's the best reading since September 2012 and may show that consumers are stronger than we thought.
The strong numbers were enough to finally get investors in a buying mood, and the Dow Jones Industrial Average (DJINDICES:^DJI) was up 0.34% on widespread gains across the index. The index's daylong rally had slipped modestly in late trading.
Visa has the benefit of making money on payment processing whether sales happen at high-end retailers or dollar stores, so the jump there isn't shocking. It also has the tailwind of an upgrade from neutral to outperform at Baird, which also has a $245 price target on the stock.
The story at Wal-Mart is much more complex. The big-box retailer has been smacked by four straight quarters of declining same-store sales in the U.S., and certainly the dangers have not evaporated.
Family Dollar recently said earnings were down by a third from the year-ago quarter as competition and lower spending from consumers hit sales. It's reasonable to assume that Wal-Mart will run into similar challenges, exacerbated by the weather in the first quarter.
It may seem counterintuitive, but Visa could actually be the better play on retail today because it has broad exposure and less competition than Wal-Mart, which must deal with dollar stores, online retailers, and low-end consumers who don't have disposable income to spend it its stores these days.