In many ways, a strong consumer helped to push the market
higher in the past few months, as firms from this corner led the
way to new highs. Broad
tracking the consumer discretionary market like the
Select Sector SPDR (
are pretty close to their 52 week highs with the bulk of the
gains coming in the trailing three month period.
latest consumer confidence report
was very bearish and could suggest some weakness in the space
going forward. The key measure plunged to 58.6, well below the
consensus of 65.1 and three points below even the most bearish
prediction from those surveyed.
It appears as though the higher payroll tax is really starting
to weigh on confidence, leaving many gloomy about their earnings
prospects in the future. Just 13.6% surveyed see their income
increasing, marking the lowest reading on this front since
The news isn't all bad though, as home prices continue to hold
firm and the job market has been improving-albeit slowly-for some
time now. One has to believe that this could help to boost
confidence back higher, but it is hard to say at this point in
time whether this will be enough to make up for the income
reduction thanks to the higher taxes.
What do you think, should we be worried about the consumer
going forward or is this a temporary bump in the road?
Are you a buyer or seller of discretionary firms at this
Let us know in the comments below!
SPDR-CONS DISCR (XLY): ETF Research Reports
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