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February 5, 2025

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Walmart, Costco, and Sprouts: The Ultimate Trade War Survivors?

6 Mins Read

Monday’s market opening was a doozy, with all three indices down nearly 2% in overnight trading. This was in response to President Trump’s 25% tariffs on Mexico and Canada and a 10% tariff on China. Eventually, the indices were able to stem their losses as Trump paused the tariffs on Canadian and Mexican imports for a month, a strategic move aimed at pressuring trade negotiations.

Before the markets stabilized, however, I ran a few scans to identify stocks bucking the trend, looking for resilience amid fears of escalating trade tensions. Using StockCharts’ MarketCarpets, I quickly zoomed in on the Consumer Staples sector—one of the most tariff-sensitive areas likely to impact consumers.

FIGURE 1. MARKETCARPETS 1-DAY VIEW OF CONSUMER STAPLES.  Walmart and Costco were among the top-gaining stocks in the sector. While both are exposed to tariff pressures, their positioning and scale allow them to mitigate the impact differently.Image source: StockCharts.com. For educational purposes.

Following this, I chose to run a scan for Outperforming SPY: 52-Week Relative Highs to identify top-gaining stocks in the Consumer Staples sector.

FIGURE 2. SCAN RESULTS FOR OUTPERFORMING SPY: 52-WEEK RELATIVE HIGHS.  Three big grocery stocks came up—COST, WMT, and SFM.Image source: StockCharts.com. For educational purposes.

Here’s where it gets interesting:

Costco (COST) benefits from a loyal membership base, bulk discounts, and strong private label offerings, helping it absorb tariff-related costs. Its diversified supply chain and purchasing power further mitigate exposure.

Walmart (WMT) enjoys similar economies of scale and private label advantages, but if consumers trade down or cut discretionary spending, margin pressures could weigh on revenues.

Sprouts Farmers Market (SFM) sources some products locally but relies heavily on Mexican imports. If rising prices make customers more price-sensitive, they may shift to larger chains like Walmart or Costco. Among the three, SFM is most at risk in the event of a prolonged trade war with our local neighbors.

Let’s take a one-year look back using the StockCharts PerfCharts and see how these stocks performed relative to the Consumer Staples Select Sector SPDR Fund (XLP), a sector proxy, and the S&P 500 ($SPX).

FIGURE 3. PERFCHARTS ONE-YEAR VIEW OF XLP, COST, WMT, SFM, AND $SPX. Note how far SFM outperformed them all.Chart source: StockCharts.com. For educational purposes.

I’ve written about SFM before, but I wasn’t expecting the stock to have outperformed its peers in the way that it has over the last year. All three stocks outperformed the S&P 500, while XLP underperformed the broader market.

Now it’s time to zoom in, starting with a daily chart of COST.

FIGURE 4. DAILY CHART OF COST. Relative to the Consumer Staples Bullish Percent Index ($BPSTAP), Costco is remarkably bucking the trend.Chart source: StockCharts.com. For educational purposes.

Costco is poised to break above resistance at $1,008, a move that would push the stock to an all-time high. But does it have the momentum to sustain the rally? While breadth in the sector looks weak, with just 29% of stocks flashing Point & Figure buy signals according to the Consumer Staples sector’s Bullish Percent Index (BPI), COST stands out as an exception alongside two other names. The Relative Strength Index (RSI) suggests the stock is entering overbought territory but still has room to run, while the StockCharts Technical Rank (SCTR) has just cleared the bullish 70 threshold, although it has struggled to hold above the ultra-bullish 90 level.

If the breakout fails, key support levels are $908 and $870. Momentum and volume are critical indicators of any potential bounce.

Shifting to a daily chart of WMT, the stock has maintained a steady uptrend with minimal volatility, aside from a summer dip, a sharp November rally, and a December pullback. The stock recently cleared resistance at $96, propelling it toward an all-time high.

FIGURE 5. DAILY CHART OF WMT. The stock price is at all-time highs. Volume and momentum are giving slightly, which may signal a pullback. Watch the Keltner Channel bands that are overlaid on the price chart.Chart source: StockCharts.com. For educational purposes.

The SCTR score remains around 90, signaling strong technical momentum across multiple timeframes. Keep an eye on price as the RSI is signaling potential overbought territory.

In terms of volume, the Chaikin Money Flow (CMF) indicates a surge in buying pressure, reinforcing bullish sentiment. If WMT pulls back, keep an eye on the Keltner Channel bands, which act as both a trend indicator and dynamic support/resistance levels. Additionally, the most recent swing low of around $90 could serve as a key support zone.

Now, the strongest performing stock of the bunch: Sprouts. Below is a daily chart of SFM.

FIGURE 6. DAILY CHART OF SFM. This stock is the outperformer of the bunch. Watch key support levels (blue dashed horizontal lines) should it pull back.Chart source: StockCharts.com. For educational purposes.

Sprouts Farmers Market has exhibited strong technical momentum throughout 2024, mirroring WMT’s bullish trajectory. With the stock breaking above $155 to reach an all-time high, the Money Flow Index (MFI) signals overbought conditions, hinting at a potential pullback. If selling pressure emerges, key support levels to watch include prior resistance at $155, a congestion zone between $138 and $143, and the major swing low around $125. While MFI confirms strong volume and momentum, it also suggests that the rally may be a bit stretched in the short term.

At the Close

Costco, Walmart, and Sprouts Farmers Market have outperformed their sector peers, defying broader weakness in the group. While strong sector performance usually provides a tailwind for individual stocks, the opposite scenario raises concerns that sector-wide pressure could eventually drag these leaders lower. Monitor their key levels closely, especially during pullbacks, to determine whether they present a buying opportunity or a signal to stay on the sidelines.

If some stocks, like COST, are too pricey to buy several positions outright, check out StockCharts’ OptionsPlay Strategy Center to discover alternative strategies that align with your directional bias and risk tolerances, allowing you to capitalize on market opportunities more efficiently.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

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In World news

Ukraine’s mineral riches have long been eyed by its allies. Now they may be Trump’s price for military aid

5 Mins Read

US President Donald Trump has said he wants access to Ukraine’s mineral deposits in exchange for future military aid that Kyiv needs as it continues to defend itself against Russia’s aggression.

While the comment highlighted Trump’s transactional approach to the war in Ukraine, it was not entirely unexpected. The US and other Western countries have eyed Ukraine’s mineral riches for a long time.

“We’re putting in hundreds of billions of dollars. They have great rare earths. And I want security of the rare earth, and they’re willing to do (that),” Trump told reporters in the Oval Office on Monday, without specifying what, if anything, Ukraine had agreed to do.

He has previously suggested that any future assistance should be provided as a loan and would be conditioned on Ukraine negotiating with Russia.

Under former US President Joe Biden, the US had provided Ukraine with $65.9 billion in military assistance since Russia launched its full-scale invasion of the country in February 2022.

Biden argued the aid was necessary because Ukraine’s victory was key to America’s own security. Trump, however, has made it clear he doesn’t believe the US should continue providing assistance without getting something in return.

While Trump did not give any details on what he wants from Kyiv, a deal outlining a deeper cooperation between the US and Ukraine on minerals had been in the works for months before he took office in January.

A memorandum of understanding prepared under the Biden administration last year said the US would to promote investment opportunities in Ukraine’s mining projects to American companies in exchange for Kyiv creating economic incentives an implementing good business and environmental practices.

Ukraine already has a similar agreement with the European Union, signed in 2021.

Adam Mycyk, a partner in the Kyiv office of the global law firm Dentons, said that while the objective of the deal – securing critical mineral supplies from Ukraine – remains unchanged, Trump’s approach seems to be more transactional.

Kyiv has not yet responded to Trump’s comments, but the Ukrainian government has in the past made the argument that its mineral deposits are one of the reasons the West should support Ukraine – to prevent these strategically important resources from falling into Russian hands.

Ukraine’s President Volodymyr Zelensky has specifically mentioned the possibility of future investments in the country’s natural resources by its Western allies as a key part of his “Victory plan.”

“The deposits of critical resources in Ukraine, along with Ukraine’s globally important energy and food production potential, are among the key predatory objectives of the Russian Federation in this war. And this is our opportunity for growth,” Zelensky said in a statement outlining the plan in October.

Nataliya Katser-Buchkovska, the co-founder of the Ukrainian Sustainable Investment Fund, said a deal that would bring US investment into Ukraine’s mining sector would be beneficial for both sides.

The US largely depends on imports for the minerals it needs, many of which come from China. Of the 50 minerals classed as critical, the US was entirely dependent on imports of 12 and more than 50% dependent on imports of a further 16, according to the United States Geological Survey, a government agency.

Ukraine, meanwhile, has deposits of 22 of these 50 critical materials, according to the Ukrainian government.

“It is not only a crucial step for Ukraine’s post-war economic recovery, but it’s also a chance for the US to address global supply chain issues,” said Katser-Buchkovska, who served as a member of the Ukrainian Parliament from 2014 to 2019 and was the head of a parliamentary committee on energy security and transition.

China’s global dominance

Although Trump used the term “rare earths,” it is unclear whether he intended to refer specifically to rare earth minerals – a group of 17 elements that exist in the earth’s core and have magnetic and conductive properties that make them crucial to the production of electronics, clean energy technologies and some weapon systems.

Ukraine doesn’t have globally significant reserves of rare earth minerals, but it does have some of the world’s largest deposits of graphite, lithium, titanium, beryllium and uranium, all of which are classed by the US as critical minerals. Some of these reserves are in areas that are currently under Russian occupation.

China has long dominated the global production of rare earths minerals and other strategically important materials. It is responsible for nearly 90% of global processing of rare earth minerals, according to the Center for Strategic and International Studies (CSIS). On top of that, China is also the world’s largest producer of graphite and titanium, and a major processor of lithium.

The latest trade spat between Washington and Beijing makes it even more important for the US to look for alternative suppliers.

The economic measures China announced on Tuesday in retaliation for Trump’s new tariffs include new export controls on more than two dozen metal products and related technologies. While they do not cover the most critical materials the US needs, the move indicates that China is prepared to use its mineral riches as leverage in trade disputes.

Mycyk said that the demand for these critical materials is expected to surge because of the global transition to electric vehicles and renewable energy technologies.

“Ukraine’s deposits are thus globally significant, offering diversification away from dominant producers like China. Keeping these resources under Ukrainian control is crucial for maintaining its economic sovereignty,” he added.

This post appeared first on cnn.com

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In Business

Ontario to remove U.S. alcohol from shelves after Trump’s tariffs announcement

2 Mins Read

Ontario will pull all American alcohol from its government-run liquor shelves beginning Tuesday in response to U.S. President Donald Trump’s 25% tariffs on Canadian imports.

Outlets of the Liquor Control Board of Ontario will also take U.S. products out of its catalog so other retailers can’t order or restock those items, according to a Sunday statement by Premier Doug Ford.

“Every year, LCBO sells nearly $1 billion worth of American wine, beer, spirits and seltzers. Not anymore,” Ford said. “There’s never been a better time to choose an amazing Ontario-made or Canadian-made product.”

Ford’s announcement came just hours after Canadian Prime Minister Justin Trudeau slapped retaliatory tariffs of 25% against $155 billion of U.S. goods.

The LCBO is one of the largest wholesalers of alcohol, selling more than 1.1 billion liters of alcohol products in Ontario in 2023. According to the Observatory of Economic Complexity, Canada primarily imports hard liquor from America with an estimated $320 million in sales. The U.S.’s second main export destination for liquor as of October 2024 is Canada, with a $25.9 million trade value, according to the OEC.

In a statement provided to CNBC, the LCBO said it will be stopping all sales of U.S. alcohol products online and in stores “indefinitely,” adding that it is the “importer of record” for all American alcohol into Ontario. LCBO currently lists more than 3,600 products from 35 U.S. states, the statement added.

The move follows other similar Canadian premiers’ announcements of retaliation to the tariffs, including Nova Scotia Premier Tim Houston directing the Nova Scotia Liquor Corporation to remove all American alcohol from their shelves on Tuesday and British Columbia Premier David Eby directing the BC Liquor Distribution Branch to “immediately stop buying American liquor from “red states” and remove the top-selling “red-state” brands from the shelves.”

This post appeared first on NBC NEWS

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