With consumers feeling lousy how long can they spend?
Main U.S. indexes advance; Nasdaq out front, up ~0.9%
Tech leads S&P 500 sector gainers; Energy is sole loser
Dollar up ~0.2%; bitcoin up >4%; gold slips ~0.2%; crude off >2%
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
WITH CONSUMERS FEELING LOUSY HOW LONG CAN THEY SPEND?
With economic data coming in generally strong, U.S. investors have been inclined these days to believe in the idea of a soft-landing or a no-landing scenario, where the U.S. economy sees a very mild recession or avoids one altogether.
Meanwhile, Scott Wren, senior global strategist at the Wells Fargo Investment Institute, sees contradictions in consumer data and is keeping an eye out for deterioration down the road while expecting "acceptable" retail sales data later this week.
On Friday executives at two of the country's biggest lenders, Wells Fargo and JPMorgan, said U.S. consumers remain resilient with solid spending in the third quarter, although they noted signs that higher inflation has stretched some Americans on lower incomes.
On the same day the University of Michigan's preliminary reading on the overall index of consumer sentiment showed it slipping in October with lingering frustration over high prices.
The survey showed sentiment at 68.9 for this month, compared to a final reading of 70.1 in September with economists polled by Reuters expecting a 70.8 reading.
Wren told Reuters the market "hasn't been paying much attention to sentiment data" even though it's been weak.
"It hasn't been good for a while because of inflation. Inflation is moderating, but people see that prices are a lot higher than a few years ago and that their wages haven't kept pace. That's hurt confidence. That's hurt sentiment."
But there's a contrast between the what people are saying and what they are doing.
"Consumers might say they're not feeling all that great, but they've been out spending money at least up till now," said Wren. "Americans that have jobs and money in their pocket, they're going to spend it."
He points to high gas, grocery store and housing prices.
"They don't like any of that stuff. But if they're employed, and by any stretch of the imagination we have a low unemployment rate right now, they have money in their pockets," he said.
"They have to buy food. They have to have someplace to live," he said. "But they're also spending money on discretionary things like restaurants and vacations, all those things that they don't have to do, but they choose to do."
But can this contradiction last?
"So far the higher unemployment rate hasn't dented retail sales that much," said Wren. And Thursday is expected to show September month-over-month retail sales growth of 0.3% after August's 0.1%.
"But there's some downside risk. People have tapped their 401ks. They've tapped savings and home equity loans to fund spending," he said. "That can only go on for so long."
"We think the unemployment rate's going to go higher and that's going to create some headwinds for consumer spending," said Wren. "So we're not expecting strong consumer spending over the next few quarters. We think there's a lot of headwinds out there."
(Sinéad Carew)
*****
FOR MONDAY'S EARLIER LIVE MARKETS POSTS:
CHINA MAY STILL NEED TO PACK ON MORE POLICY INITIATIVES - CLICK HERE
NASDAQ LEADS WALL STREET GAINS WITH TECH IN CHARGE - CLICK HERE
WILL THIS ECHO FROM THE PAST HAUNT THE S&P 500? - CLICK HERE
FIVE REASONS TO STILL WORRY ABOUT INFLATION - CLICK HERE
UK DOMESTIC BANKS ATTRACTIVE DESPITE BUDGET UNCERTAINTY - UBS - CLICK HERE
CHINA’S STIMULUS: HOW MANY TRILLIONS FOR AN EQUITY BOOST? - CLICK HERE
EUROPEAN SHARES MOSTLY HIGHER, UK GAMBLING NAMES TUMBLE - CLICK HERE
EUROPEAN STOCK FUTURES STRUGGLE FOR DIRECTION - CLICK HERE
CHINA STIMULUS GETS MIXED REVIEWS - CLICK HERE
Activos relacionados
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.
