Investors are closely watching consumer spending
2022.11.25 11:49
Investors are closely watching consumer spending
Budrigannews.com – As the most important shopping season of the year kicks off on Friday, investors are keeping a close eye on U.S. retail stocks as a barometer of consumer confidence in the face of rising inflation.
In Friday morning trading, consumer discretionary stocks, as measured by the Consumer Discretionary sector (the group of businesses that benefit from spending on retail, dining, and vacations), were flat.
Consumers have been hammered by soaring inflation and the quickest increase in interest rates since the 1970s, resulting in a 32 percent decline in the sector for the year to date—more than double the 15.5% decline experienced by the S&P 500 as a whole.
According to Jim Paulsen, chief investment strategist at the Leuthold Group, “these stocks are a clue as to how fast the economy is slowing and whether slowing inflation is lifting confidence on Main Street.”
NASDAQ: ExpediaRalph Lauren Corporation, Group Inc. (NYSE:)likewise Home Depot Inc.each gained more than 1.6% on Friday, compared to a gain of 0.1 percent in the benchmark S&P 500.
Adobe (NASDAQ:) estimates that consumers spent a record $5.29 billion online on Thanksgiving Day. Analytics data, up 2.9% from a year ago because of big discounts in toys and electronics categories.
Toys, electronics, and computers saw the biggest discounts on Black Friday, with discounts as high as 34% off the list price.
In October, consumer prices in the United States increased at a rate that was slower than economists had anticipated. This resulted in the annual increase falling below 8% for the first time in eight months and sparked a rally in the broad U.S. stock market on hopes that inflation had finally reached its zenith after languishing near 40-year highs.
The National Retail Federation, a trade organization, predicts that holiday sales, including e-commerce, will rise between 6 and 8 percent to $942.6 billion and $960.4 billion in November and December. That would be lower than the increase of 9.3% in 2020 and 13.5% in the previous year.
To entice customers, retailers began offering unusually early discounts this year.
Target Corporation,Amazon.com Inc. and Kohl’s Corporation (NASDAQ:)ran so-called early Black Friday deals, which took place the day after Thanksgiving and saw discounts of up to fifty percent on toys and other products.
This story did not receive a comment from those businesses.
However, popular items like PJ Masks toys and Mattel Inc. (NASDAQ:) will still cost more to purchase even with substantial discounts.’s Mega Hauler semi-truck because, according to DataWeave data, prices have increased faster than promotions.
When asked to comment, Mattel did not.
The University of Michigan’s closely watched consumer sentiment poll was revised up to 56.8 from 54.7 on Wednesday, beating the consensus expectation of 55.0 but still below the 59.9 index level from October. The efforts to entice customers come as the poll was revised up.
The survey found that high interest rates and high prices caused a 21% drop in expectations for purchasing manufactured goods with a long lifespan.
Thomas Simons, an economist at Jefferies LLC, stated, “The sentiment data has been sliding sideways as consumers try to reconcile solid economic and labor market conditions against expectations of a recession and harmful inflation.”
As consumers fully recover from the coronavirus pandemic, retailers have struggled to adjust their offerings, resulting in overstocked stores.
Walmart, Inc.For example, Inc. raised its annual sales and profit forecast because it expected that demand for groceries would remain strong despite higher prices.In contrast, Target anticipated a surprising decrease in holiday quarter sales.
For the month, Walmart shares are up 7.5%, while Target shares are down 1.2%.On Friday, Walmart’s stock dropped 0.2 percent and Target’s stock dropped 0.7 percent.
Macy’s Inc., a department store, (NYSE:)last week, it raised its forecast for annual profit.The company’s stock is up nearly 12% so far this month.
NYSE: Kohl’sin the mean time, pulled out its figure as it faces debilitating interest because of rising costs.The company’s stock is up 6.7% so far this month.
