The One That Rose

Today's selling was broad, with nearly all the S&P 500's components closing in the red today. All but one, that is: Kroger. The grocery chain's stock managed to post a slight 0.4% gain, bucking the trend. Kroger’s business has been a rare beneficiary of the coronavirus outbreak and resulting physical-distancing requirements.

With many restaurants closed and people working from home cooking more, Kroger and other grocers have seen higher-than-normal sales of food and other staples since February. Other retailers classified as nonessential have been closed as well, and that has boosted sales of nongrocery items at Kroger and other big-box stores that have remained open.

That advantage has waned in recent weeks, as more nonessential businesses and restaurants reopened in more states. Kroger stock is down about 5% since the middle of May, while the S&P 500 has returned more than 13%. But should investors’ worst fears be realized and a new wave of stay-at-home orders and restrictions appear, Kroger’s business could get another boost. For the same reason, Walmart stock slipped a relatively modest 0.9% today.

It isn’t in the S&P 500, but Zoom Video Communications stock also closed up 0.5% today, thanks to investors betting on a slower return to the workplace. It has been the poster-child stock for the coronavirus market, up 226% year to date.

Several consumer staples stocks were among the smallest S&P 500 decliners today. Shares of toilet-paper maker Kimberly-Clark fell 1.1%, as did Clorox’s, which sells cleaning liquids, disinfecting wipes, and germ-killing bleach—thank economic resiliency and heightened demand for their products during the coronavirus outbreak.

Cabot Oil & Gas stock lost 0.5% today, the smallest loss in the S&P 500. There are a few layers to explain that relative outperformance. A slower economic recovery means less demand for energy, and extended physical distancing means less driving from commuters and consumers. Accordingly, oil prices tumbled alongside stocks today.

Cabot is one of the largest U.S. natural gas companies, and about a third of U.S. natural gas output comes as a byproduct of shale oil production. If lower oil prices cause shale producers to cut back on supply, that should lead to lower natural gas supply and higher prices. That would benefit Cabot.