Retail Stocks ... in This Economy?!

Could we be in for the summer blues? Published By Money & Markets, LLC. June 07, 2024 Published By Money & Markets, LLC. June 07, 2024 [Turn Your Images On] [Turn Your Images On] From The Desk of [Matt Clark, CMSA®]( Chief Research Analyst, [Money & Markets Daily]( Retail Stocks … in This Economy?! Here's What Green Zone Power Ratings Says Money & Markets Daily, Despite expectations, the Federal Reserve has not cut its benchmark interest rate in 2024. And the stock market doesn’t seem to care. “Higher for longer” rates are traditionally a headwind for the stock market, but that hasn’t been the case in 2024. Instead, U.S. indexes have posted higher highs throughout the first half of the year. On the last trading day of May, the Dow Jones Industrial Average jumped 1.5% while the S&P 500 gained 0.8% — both indexes' largest daily gains since November 2023. All of this while inflation has been stuck above the Fed’s benchmark of 2%. Now, investors are wondering how long bullish action in the market can continue. Today, I’ll look at how we got here and zero in on one sector that hints at what’s next. --------------------------------------------------------------- [Turn Your Images On]( From our Partners at Banyan Hill Publishing. [Crypto’s Next Bull Market]( Cryptocurrency expert Ian King has identified the next crypto coin set to go through the roof. In just one year, his December 2020 recommendations gave investors returns of up 1,061%, 1,934% or even as high 18,325%. Don't miss out — follow Ian's latest advice for [full details on how you can get involved today while prices are still low.]( --------------------------------------------------------------- Market Rises While Inflation Stalls From June 5, 2023, to June 3, 2024, the S&P 500 had its second-strongest 52-week gain ever of 23.6% — falling short only to 34.3% gain following the Covid crash: [Turn Your Images On] While the gain in the S&P 500 is something to cheer as an investor, it comes at a time when inflation has leveled off. The U.S. personal consumption expenditures (PCE) index jumped 0.3% in April — matching the increase from the month before. The PCE has come down on an annualized basis, but not the level the Fed is comfortable with in order to start cutting its benchmark funds rate: [Turn Your Images On] The PCE stalling out doesn’t provide a compelling argument for the Fed to start cutting its rates in the immediate future. While some indexes have notched fresh highs this week, the data suggests we could see some summertime blues ahead. If the stock market rally is going to continue, it needs two things: - Higher consumer confidence. - A stronger U.S. economy. Let’s shine a spotlight on the first and look at retail stocks as a base for that consumer confidence. --------------------------------------------------------------- [Turn Your Images On]( [AI Predicts No. 1 Stock to Own]( New AI-powered stock rating system — that isolates stocks with the highest probability of producing the biggest gains — just released details on the top-rated stocks... [Details here…]( --------------------------------------------------------------- In Focus: Consumer Confidence and the Retail Sector The Conference Board's May consumer confidence data is telling: [Turn Your Images On] Consumer confidence did tick up in May after three months of declines, but it remained in the narrow range it’s been in for the last two years. This tells me that American consumers may be trying to replenish their depleted savings rather than buy a new T.V. To examine consumer spending more closely, I ran the SPDR S&P Retail ETF (NYSE: XRT) through an X-ray of Adam O’Dell's Green Zone Power Ratings system. XRT is an exchange-traded fund (ETF) with 77 cyclical and non-cyclical stocks — giving us a solid picture of the retail sector. Retail sales (and stocks) can signal contraction or expansion in the U.S. economy. When consumers are out spending money on everything from food and clothing to new appliances and cars, these stocks look more bullish. Of course, the opposite is also true. After seeing where consumer confidence sat, the results of my ETF X-ray of XRT were not surprising: XRT Rates “Neutral” 55 [Turn Your Images On] The average rating of stocks in XRT is a “Neutral” 55 out of 100. This rating, coupled with only a slight improvement in consumer confidence, leads me to believe we could be in for a choppy summer on the stock market. The signals also suggest the U.S. economy could be weakening … not to the point of a recession, but at least to where consumers are making more difficult decisions on where to spend their hard-earned money. But the market and the economy have indeed been walking to the beat of different drummers. Investors may continue to overlook these slowdown signs. That's why Green Zone Power Ratings is a critical tool for markets like this. It gives each stock a simple rating, telling you how that stock should perform over the next 12 months. Go ahead and try it [here.]( Until next time… Safe trading, [Matt Clark, CMSA®]( Chief Research Analyst, [Money & Markets Daily]( --------------------------------------------------------------- [Turn Your Images On] Consumers Expect More Free Money Consumers’ expectations regarding increases in federal assistance and social insurance programs improved — according to the Federal Reserve Bank of New York's Public Policy Survey. The average perceived likelihood of an increase in federal welfare and unemployment benefits rose to 36% and 30.4%, respectively, while 39.0% expected more student loan write-offs (see [Federal Reserve]( chart below). Paying for these benefits isn't a concern for many. Expectations of higher income taxes for the highest wage earners rose from 34.2% to 41.0%. These results might not mean much in an election year when voters want tangible benefits and politicians want to buy votes. But government spending is unsustainable, and a long-term reckoning is overdue. When it comes, it will be painful for voters, the economy and investors. — Mike Carr, Chief Market Technician, Money & Markets [Turn Your Images On] [(Click here to view larger image.)]( --------------------------------------------------------------- Check Out More From Money & Markets Daily: - [AAPL IS READY TO TAKE THE AI CROWN]( - [WHAT THIS $40,000 IPHONE SAYS ABOUT APPLE’S LEGACY]( - [WHAT ADVISERS WON’T TELL YOU ABOUT VOLATILITY]( --------------------------------------------------------------- [Turn Your Images On]( Privacy Policy The Money & Markets, P.O. Box 8378, Delray Beach, FL 33482. To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or [whitelist]( within your spam settings. For customer service questions or issues, please contact us for assistance. The mailbox associated with this email address is not monitored, so please do not reply. 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To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or [whitelist]( within your spam settings. For customer service questions or issues, please contact us for assistance. The mailbox associated with this email address is not monitored, so please do not reply. Your feedback is very important to us so if you would like to contact us with a question or comment, please click here: [( Legal Notice: This work is based on what we've learned as financial journalists. It may contain errors and you should not base investment decisions solely on what you read here. It's your money and your responsibility. Nothing herein should be considered personalized investment advice. Although our employees may answer general customer service questions, they are not licensed to address your particular investment situation. Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments carry large potential rewards but also large potential risk. Don't trade in these markets with money you can't afford to lose. Money & Markets permits editors of a publication to recommend a security to subscribers that they own themselves. However, in no circumstance may an editor sell a security before our subscribers have a fair opportunity to exit. Any exit after a buy recommendation is made and prior to issuing a sell notification is forbidden. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. (c) 2024 Money & Markets, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This Newsletter may only be used pursuant to the subscription agreement. 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