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Robust retail sales have bulls set to stampede

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Retail sales surged 1.2% to $300.3 billion in April, which was double the 0.6% rise economists were looking for. Excluding autos, retail sales jumped 1% to $227.9 billion, which was also stronger than the 0.4% gain forecasted by economists. The dollar value of auto sales soared 1.9% to $72.4 billion in April, a reflection of the 5% increase in unit sales reported by the automakers. Gasoline sales rose 2% to $19.2 billion as prices jumped nearly 10%.

Consumers were spending in April, spreading their dollars among multiple sectors. Sales at building materials and garden stores rose 2.7% to $26.5 billion. Sales at general merchandise stores gained 1.2% to $38.4 billion. Sales at clothing stores rose 0.7% to $14.7 billion. Sales at health and personal care stores climbed 1.9% to $15.3 billion.

Sectors experiencing declines in April had furniture store sales falling -1.4% to $7.8 billion, while sales at food stores slipped -0.2% to $40 billion.

Stock futures jump

Stock futures were showing solid gains prior to this morning's retail sales numbers, then surged to now trade at their best levels of the morning.

S&P futures currently trade higher by 13.3 points at 1,088.80. NASDAQ futures are up 41 points at 1,281 and Dow futures are up 125 points at 10,230.

Fair value for the S&P 500 today is $0.28. That price will not change during the session. HL Camp & Company has their computers set for program buying at $1.28 and set for selling at $-0.92. Fair value for the NASDAQ-100 today is $2.90.

Wal-Mart beats by a penny

Discount retailing giant Wal-Mart (NYSE:WMT) $55.04 reported first-quarter earnings of $0.37 a share, which beat estimates by 1-penny. Revenues rose 14.4% year-over-year to $54.96 billion versus the $55.19 billion consensus.

Morgan Stanley believes the recent pullback in WMT from the $63 level provides a buying opportunity, especially give the confusion of April sales results. The firm believes strong fundamentals and strong earnings report will renew confidence in broad line retail shares, and sees opportunity for upside throughout the year due to WMT's exceptional inventory management and accelerating comparable store sales. Price target is $70.

Jeff Bailey
Senior Market Technician
Option Investor

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