Two well-known consumer brands actually did well during one of the steepest selloffs on Wall Street in months. Their results are a good explanation as to why investors treated them so differently to the tech stocks.
Whilst the rest of Wall Street was in freefall on November 5, 2026, Costco and Hershey were going the other way. Costco up 1.83% to $1,065.59, Hershey up 1.68% to $177.43. The gains were very significant given that the S&P 500 was down 4.36%, the Nasdaq was down 5.52% and the Dow was down 3.44%. There was a lot of selling in the tech sector as people were worried that tighter AI regulations, which investors feared could follow the Democratic wins in the midterms, would ultimately lead to a slowdown in the buildout of data centres.
Yet Costco and Hershey were attracting buyers. Their performance does raise a rather interesting question really: why were people buying shares in a warehouse club and a chocolate maker at the same time as they were selling some of the largest US tech companies? The answer is less about giving up on growth altogether and more about the kind of growth that investors are prepared to put their trust in.
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Costco came into the selloff with very strong sales numbers. Their November 4 sales announcement showed October net sales at $24.50 billion, up 12.6% on the same period in 2025. That growth is worth looking at. Comparable sales (sales at established locations, excluding the impact of changes in the price of gasoline and foreign exchange) were up 7.3%. Digitally enabled sales were up 22.5% which indicates that the growth was not just due to customers simply paying more at the pump.
These figures gave investors tangible proof of consumer demand at a time when technology valuations were under the microscope. Costco sells groceries, household goods, prescription drugs and all sorts of other things that people are still buying even when they’re being quite cautious about spending on non-essentials. Costco’s strength is of course not purely defensive. The membership model is inherently one that drives repeat business and its scale gives it the ability to negotiate very good prices. Investors are therefore looking at a business with fairly solid customer demand and potential for further growth.
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Hershey’s story is a bit different. It’s under pressure from the rising cost of cocoa and from consumers being more selective about where they spend their money on chocolate and snacks. Nonetheless Hershey’s Q3 results showed net sales up 3% to approximately $3.28 billion. Adjusted EPS was $2.64, more than double the year-ago figure. The improvement wasn’t simply due to consumers buying a lot more chocolate. Organic sales growth (excluding currency effects) was only 0.8%. Much of the earnings improvement was down to a recovery in profitability from the prior year.
Hershey Chief Executive Kirk Tanner acknowledged the difficult consumer environment in the earnings announcement:
“Our second-half demand creation initiatives are gaining momentum, even as consumers grow more cautious.”
His comments perfectly encapsulate why the stock’s move is so interesting. The market appears to be pricing in the recovery of profitability even if the underlying consumer demand is still quite weak. That distinction is important because a company doesn’t necessarily need rapid sales growth to improve its earnings. Improved cost management, better pricing and the recovery of margins can all lead to significant earnings improvements without any huge increase in sales.
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It would be a mistake to take one strong trading session as proof that Costco and Hershey are immune to a downturn. Costco’s shares are already at a fairly expensive valuation so investors are effectively already paying a premium for the expectation of continued growth. If consumer spending decelerates or margins don’t come in as expected then even a very solid retailer could see a big drop.
Hershey is in a different boat. Even with the gains on Thursday, the shares are still around 26% down on their March 2026 high. Chocolate demand is also clearly under pressure with Reuters reporting that U.S. Halloween chocolate sales were down $33.1 million over the nine weeks to October 17. The wider market selloff could also be short-lived. If the AI regulatory concerns abate or the earnings outlook improves then investors could come back to the semiconductor sector.
Nonetheless the difference in Thursday’s performance speaks to something about investor behaviour. Costco provided very clear evidence of continued sales growth. Hershey provided evidence of improving profitability. Both were able to provide investors with results they could look at and judge for themselves, without having to rely so much on the expectation of massive future technology spend.
The coming weeks will tell us whether this preference holds. Costco’s comparable sales and Hershey’s profit margins will be key indicators. For the moment at least the market is sending out a very conventional message. When investors are uncertain about the future the sort of company that can show you what the customer is actually buying and how that translates into profit looks far more appealing than the company that’s going to deliver a spectacular return some years down the track.