Wall St Week Ahead-Retail stocks search for direction as rates stay high
Repeats story first published Friday with no changes to text
By David Randall and Lewis Krauskopf
NEW YORK, June 14 (Reuters) -Elevated U.S. interest rates are pressuring the U.S. retail sector, where shares of many companies have been dented by months of tight monetary policy while a select few have soared.
The S&P 500 Consumer Discretionary Distribution & Retail index .SPXRT is up nearly 14% this year, roughly keeping pace with the S&P 500’s year-to-date gain. Much of the sector’s strength, however, has been concentrated in a small group of stocks, including heavyweight Amazon.com AMZN.O, which is up nearly 21% this year.
Meanwhile, shares of companies focused on lower-income consumers have struggled, in-part because buyers in that segment have been more affected by elevated interest rates, analysts said. Among the biggest laggards are shares of Dollar Tree DLTR.O, which are down nearly 27% year-to-date and Dollar General DG.N, which have fallen nearly 9%.
The retail sector is one of several areas of the economy - in addition to real estate and consumer staples - that have been pressured by elevated rates. The Federal Reserve earlier this week reiterated that it needs to see more evidence of cooling inflation before lowering borrowing costs.
"The lower to mid-income segment is getting squeezed because of gas prices and groceries," said Greg Halter, director of research at Carnegie Investment Counsel. “They feel bad even though the economy is doing well.”
The consumer will be in focus next week when the U.S. reports retail sales data on Tuesday. Analysts polled by Reuters expect retail sales to have grown by 0.2% in May. Weaker-than-expected results - following data earlier this week showing encouraging progress on inflation - could bolster the case for the Fed to ease rates sooner rather than later.
Futures markets have reflected increased investor expectations of a September rate cut, though the Fed projected it will only lower borrowing costs in December.
The divergent performance of retail stocks has pushed investors to focus on companies whose consumers can continue to withstand higher interest rates or those that offer discounts on name-brand household items like clothing or groceries, such as warehouse club company Costco Wholesale COST.O.
Halter’s fund has been buying shares of companies such as Walmart WMT.N, Costco, and TJX Companies TJX.N whose business models emphasize value for the consumer.Their shares are up 28%, 29% and 16% respectively.
Robert Pavlik, senior portfolio manager at Dakota Wealth Management, said he has owned Costco and TJX Companies, pointing to their strong management and inventory controls.
"I think inflation will remain but moderate and consumers will still look to get the most out of their dollars," he said.
Bokeh Capital Partners owns shares of Urban Outfitters URBN.O, which are up over 20% this year. Kim Forrest, Bokeh's chief investment officer, said Urban Outfitters' strength as a fashion merchandiser has helped the company weather the inflationary environment, adding "people will sacrifice to look good."
Josh Cummings, a portfolio manager at Janus Henderson Investors, believes areas such as online shopping will continue to thrive even if interest rates stay elevated.
He has been targeting companies such as Carvana CVNA.N, whose shares have nearly doubled this year, and DoorDash DASH.O, whose shares are up around 13%.
"We're not terribly excited about the consumer sector overall, but we do think we are in the early innings of some of these growth stories," he said.
Reporting by David Randall, Editing by Nick Zieminski
Wall St Week Ahead runs every Friday. For the daily stock market report, please click .N
免責聲明: XM Group提供線上交易平台的登入和執行服務,允許個人查看和/或使用網站所提供的內容,但不進行任何更改或擴展其服務和訪問權限,並受以下條款與條例約束:(i)條款與條例;(ii)風險提示;(iii)完全免責聲明。網站內部所提供的所有資訊,僅限於一般資訊用途。請注意,我們所有的線上交易平台內容並不構成,也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料,僅適用於教育/資訊類用途,不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議,或是交易價格紀錄,或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容,包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接,皆爲‘按原狀’,並作爲一般市場評論所提供,而非投資建議。請理解和接受,所有被歸類為投資研究範圍的相關内容,並非爲了促進投資研究獨立性,而根據法律要求所編寫,而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊,相關詳情請點擊 這裡查看。