All articles tagged with #consumer discretionary
Citigroup Inc. strategists have downgraded their outlook on the US tech sector, shifting to a more cautious stance and reducing their recommendation to market-weight from overweight, while also issuing an underweight recommendation on hardware companies. They anticipate the stock rally to broaden beyond technology and have raised their outlook on consumer discretionary to overweight.
Goldman Sachs equity team identifies consumer discretionary and information technology sectors as offering the best stock picking opportunities based on dispersion, with high dispersion indicating a favorable environment for picking stocks. They highlight 25 stocks with the highest dispersion scores, including Monster Beverage, DexCom, and Akamai Technologies, among others, as potential opportunities for investors.
Barclays reiterates its Overweight rating and $142 per share price target on Nike, naming it the "Best Idea of 2024" due to catalysts such as supply and inventory management and new product innovation. Analyst Adrienne Yih emphasizes the importance of driving consumer spending through newness and innovation, highlighting upcoming releases like the Air Max Dn and Pegasus 41. Yih also discusses the margin recovery story and anticipates a 150 to 200 basis points improvement in FY '25 from inventory cleanup, with potential top line recovery in the following years.
Shares of consumer discretionary companies, including Tesla, Amazon, and Ford, surged after the release of tame inflation data, indicating that consumers may have more spending power if price increases slow. Additionally, shares of consumer staples companies like Walmart, Target, and Costco also received a boost from the data. The SPDR S&P 500 ETF also saw a significant increase in value.
Almost all sectors of the S&P 500 are experiencing losses, with consumer discretionary stocks leading the declines, followed by industrials. Financials is the only sector in the green.
Fidelity strategist Denise Chisholm suggests three surprising investing ideas. First, she believes the tech stock rally may have room to run, as historical data shows that when tech stocks outperform despite declining profits, the sector's earnings tend to more than double over the next 12 months. Second, Chisholm is bullish on consumer discretionary stocks due to their cheap valuations, falling inflation, and historically positive performance during periods of low bank lending. Lastly, she sees potential in industrials, as the sector's relative valuations are at their lowest and a drop in the Institute for Supply Management manufacturing new orders index historically leads to outperformance. Chisholm's research suggests reasons to remain positive on the stock market, particularly in the technology, consumer discretionary, and industrials sectors.
The consumer-led recession that many have been calling for appears to have ended months ago, according to the stock market. The Consumer Discretionary Select Sector SPDR exchange-traded fund has been outperforming the S&P 500 ETF since the end of last year, suggesting a new uptrend started this past week. The better-than-expected government retail sales report on Thursday was a fundamental confirmation of what the charts have been saying. The consumer’s well-being is critical for the health of the overall economy, as consumer spending accounts for about 68% of U.S. gross domestic product.
The consumer discretionary sector received a boost after consumer inflation data showed a rise of 0.1% in May, matching expectations, and an annual gain of 4%, the lowest level since March 2021. This led to hopes that lower inflation would boost spending. As a result, stocks of companies such as Tesla, Amazon, and Ford rose, with the Consumer Discretionary Select Sector SPDR exchange-traded fund reaching a nine-month high.
The S&P 500 is indicating an oncoming recession, according to economist David Rosenberg, who pointed to a slump in consumer discretionary, transportation and banking stocks as evidence. Despite the benchmark index rising 7.7% this year, Rosenberg said the most economically sensitive areas are down 33%, behaving as they did heading into previous downturns. Rosenberg recently predicted a recession has already hit US corporate profits, while markets guru Larry McDonald warned of a 30% crash in the S&P 500 by December due to dwindling corporate profits, less government spending and banking stress.
Corporate bankruptcy filings in the US surged in March, with 71 filings, marking the fourth straight month of increases and the highest monthly tally since July 2020. The first quarter of 2023 saw the highest number of petitions since 2010, with 183 major companies announcing bankruptcies. The sectors hardest hit so far this year have been consumer discretionary, financials, and health care. The rise in bankruptcies is attributed to weaker consumer spending due to inflation and rapidly rising interest rates.