Food Is Next For Amazon
With so much on offer already, Amazon.com Inc. (AMZN, -1.12%) is now turning to food like so many other retailers. It was reported that the company is now preparing to add a variety of private-label brands which will also include specific grocery items such as baby food, cereal, milk as well as household cleaners. This move by Amazon to expand in to the private label business can be viewed as a traditional retail model where instead of selling store owned goods, a company sells name brand products. Today, mass market retailers rely strongly on private labels as it generates stronger margins and also boosts loyalty with customers. Earlier in May, Amazon sought trademark protection for a wide variety of products for its Elements brand which included items such as dog food, water, vitamins, soup etc. Elements first line included baby wipes and diapers which are still available today to Amazon’s customers who pay for a Prime unlimited shipping membership of $99. For its new quest to add private-label products, Amazon has been in discussions with TreeHouse Foods Inc. (THS, -0.48%) which is one of the biggest private label producers with over $3 billion in sales last year. Amazon is currently trading at $426.57 a share.
With U.S. stocks declining on Thursday after a volatile trading session, it seems that stocks are on pace for a weekly drop. This decline came as investors responded negatively to comments by Federal Reserve officials regarding the possibility of interest rate hikes this year. The president of the San Francisco Fed, John Williams, said while speaking to the Monetary Authority of Singapore that the central bank is likely to increase rates this year, reconfirming comments by Federal Reserve Chairwoman, Janet Yellen, made last Friday. Williams also went on to say that the central bank should not use the policy on interest rates in order to address financial stability risks. At the close of trading, the Nasdaq Composite Index (COMP) dropped 0.2%, or 8.62 points, to 5,097.98. This tech heavy index pulled back slightly from the record level reached on Wednesday. Meanwhile, the Dow Jones Industrial Average (DJIA) declined 0.2%, or 36.87 points, to 18,126.12 while the S&P 500 index (SPX) fell 0.1%, or 2.69 points, to 2120.79.
In currency trading on Thursday, the U.S. dollar (USD) held steady in quiet trade. This came after the release of economic data in the U.S. as well as expectations regarding an interest rate hike by the Fed which continued to support the greenback. In their report, the National Association of Realtors said that its index for pending home sales increased in April by 3.4%. This marked the highest level since 2006 while also easily beating expectations for an increase of 0.9 percent. Meanwhile, pending home sales year on year rose in April at an annualized rate of 13.4%. Separately, in another report, the Department of Labor showed that the number of people filing for initial jobless benefits in the week ending May 23 rose to 282,000, up 7,000. In the previous week, the total was 275,000. This missed analysts’ expectations for a decline to 270,000, down 5,000. The EUR/USD held steady at 1.0897 while the USD/JPY traded at 124.22, up 0.48%. This marked the highest level since June 2002. Against the British pound and the Canadian dollar, the greenback traded higher with GBP/USD down 0.48% to 1.5286 and with USD/CAD up 0.52% to 1.2517. Also, the U.S. dollar index was at 97.55, up 0.22%.
On Friday, in early morning Asian trade, crude oil prices gained. This came in response to positive data out of Japan regarding demand as a result of higher industrial output while investors have now shifted their focus on to the OPEC meeting which will take place next week. WTI crude oil for delivery in July traded at $58.36 a barrel, up 1.17% on the NYMEX. Meanwhile on Thursday, in their weekly report, the Energy Information Administration (EIA) reported that crude inventories for the week ending May 23 dropped by 2.8 million barrels. This marked the 4th consecutive week of weekly declines while also beating expectations for a decline of 0.9 million barrels on the week. Also, on Thursday, Brent crude oil for delivery in July traded at $62.59 a barrel, up 0.85%, or 0.53, on the Intercontinental Exchange (ICE).