Investors are finding some comfort in the companies behind everyday purchases. As hotter inflation and concerns about AI spending weigh on tech stocks, money is moving toward consumer staples, with Walmart and Costco among the retailers benefiting from the shift.
Inflation pushed buyers toward staples
US inflation accelerated to 3.7% in September, giving investors another reason to reconsider their exposure to expensive growth stocks. Consumer staples, which include everyday essentials such as groceries and household products, were among the few areas attracting buyers.
The shift wasn't limited to traditional staples companies, either. As concerns about AI financing and competition weighed on Nvidia and Amazon. Investors also turned toward Nike, Sherwin-Williams, Home Depot, and McDonald's.
The broader buying suggests investors were looking for businesses with more predictable consumer demand rather than simply chasing individual stocks.
The shift showed up in the State Street Consumer Staples Select Sector SPDR ETF, which purchased $93.1M worth of stocks on October 14 without recording any sales.
All 33 holdings saw purchases, with Walmart receiving the largest allocation at $10.3M. That brought the retailer's weighting to 11.1% of the fund.
Consumer Staples Select Sector SPDR ETF ($XLP): largest purchases on Oct 14, 2026
USD; weight is share of fund after the purchase
| Company | Amount bought | Fund weight |
|---|---|---|
| Walmart ($WMT) | $10.3M | 11.09% |
| Costco ($COST) | $8.7M | 9.33% |
| Procter & Gamble ($PG) | $7.3M | 7.79% |
| Coca-Cola ($KO) | $7.1M | 7.61% |
| Philip Morris International ($PM) | $6.4M | 6.86% |
Holiday spending looks promising
The timing is particularly interesting because the holiday shopping season is approaching. The National Retail Federation (NRF) expects November and December retail sales to increase 4.2% from last year, reaching $1.013T.
That would be an improvement over 2025, when holiday spending grew 3.1% to $972B, missing the NRF's forecast of 3.7% to 4.2%.
Inflation is contributing to the higher sales forecast, although NRF chief economist Mark Mathews expects nearly half of the nominal increase to come from actual spending growth.
"We head into the holiday season with strong spending momentum, as consumers remain the bright spot in the economy."
Mark Mathews, National Retail Federation
The labor market offers a less encouraging picture. Retailers are expected to hire between 325K and 375K seasonal workers, reflecting a slower hiring environment despite expectations for stronger sales.
Why Walmart and Costco stand out
Beyond the broader shift toward defensive stocks, both retailers have company-specific developments attracting attention.
Walmart is expanding employee benefits, introducing a zero-dollar prescription tier covering more than 250 medications for US associates. The initiative adds to its efforts to retain employees while maintaining its focus on value-conscious shoppers.
Costco, meanwhile, continues to attract confidence from analysts. Tigress Financial's Ivan Feinseth recently raised his price target by 17% to $1,250, maintaining his Buy rating.
His optimism comes largely from Costco's membership business, alongside its expanding international operations and investments in AI-powered digital commerce.
Membership growth is particularly important because those recurring fees provide a revenue stream beyond merchandise sales. Costco has also seen membership among shoppers under 40 increase nearly 60% since the pandemic, suggesting its appeal is extending to younger consumers.
What investors should watch
For investors considering consumer staples, the choice comes down to how much exposure they want to individual companies.
The XLP fund holds 33 stocks across retailers, packaged food manufacturers, and tobacco companies, offering broader exposure than buying Walmart or Costco individually. However, the two retailers already account for more than 20% of the fund, making them important drivers of its performance.
Individual stocks offer more concentrated exposure, but their performance depends more heavily on company-specific results.
There is also a reason to be cautious about treating the recent rally as a lasting trend. Investors have been responding to inflation concerns and uncertainty surrounding AI spending, both of which could change.
The upcoming holiday season should provide a clearer picture of consumer demand. NRF president and CEO Matthew Shay says shoppers have continued spending despite economic pressures, and the organization's latest forecast suggests that resilience could carry through December.
For investors, the question is whether that spending translates into stronger business results, particularly as inflation continues to influence what consumers buy and how much they are willing to pay.
