What's going on?

Wal-Mart, the huge US retailer, saw its stock jump 9% as its first quarter financial results showed that it didn�t succumb to the weakness afflicting other companies that sell products to consumers.

What does this mean?

It�s been a rough few weeks for US retailers (i.e. companies that sell things like clothes and appliances to everyday people). Clothing sales have been brutally weak (just ask Macy�s) and even more diversified retailers, like Target, have seen their stock prices get smoked. Wal-Mart, however, bucked that trend and reported better than expected sales and profit. It seems like the turnaround plan, which we reported on in October, is having some success.

Why should I care?

For the stock: Wal-Mart�s poor e-commerce growth is worrying. The company managed to increase its total sales 1% versus the same quarter a year ago. That sounds tiny, but for such a huge retailer that is, as one analyst put it, a heroic effort. The problem for Wal-Mart is that its online sales growth of 7% is, in its own words,�disappointing. It needs that online sales growth – and it won�t get any easier as Amazon starts to focus more on groceries, which account for 55% of Wal-Mart�s sales.

The bigger picture: Why all this focus on retailers? Because the shopper (a.k.a. you) is very important! Consumer spending accounts for about two-thirds of US economic activity. And financial results from the largest retailers give a decent glimpse of the health of the US consumer (for example, Wal-Mart accounts for 10% of total retail sales in the US). So, Wal-Mart�s news suggests that Americans are perhaps in better financial shape than previously thought. That supports the theory that the weak reading for first quarter economic growth was incorrect. Couple that view with recent data suggesting that US economic growth picked up in April and it appears that, perhaps, the overall US economy is doing all right.