Wall Street Alarmed: US Consumer Strength Falters
Despite stocks nearing record highs, concerns are emerging on Wall Street regarding the US consumer, who drives a significant portion of the country's GDP growth despite being heavily indebted. According to Scott Feiler, a retail expert at Goldman Sachs, while there's general optimism among investors about consumers, recent data suggests a different story. Consumer/Specialty Retail stocks saw significant net selling last week, and the retail group consistently underperformed throughout the week despite positive corporate updates and a better-than-expected jobs figure.
Feiler doesn't want to alarm anyone, but he notes two significant changes: firstly, many companies have been giving cautious updates lately, indicating that consumers might be feeling financially strained. Secondly, there's a lot of concern about rising gas prices, which is affecting consumer spending patterns more than the prospect of higher interest rates.
On the macroeconomic front, Feiler acknowledges that overall data, especially regarding jobs, has been positive. However, there are concerns about lower-income employment, although the job market as a whole remains robust.
Feiler also provides micro-level insights into specific companies: LW missed volume estimates due to supply disruptions, ULTA faces questions about market share losses, and PVH noted a slowdown in Europe. Additionally, there are observations on particular stocks like SBUX, DLTR, BBWI, and BURL, reflecting investor sentiment and company performance in the current economic climate.