Consumer stocks buoyed by improving sentiment
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Improving consumer sentiment is underpinning sectors with increased sensitivity to consumer spending habits, with most names in the retail, luxury, and leisure sectors outperforming the S&P 500. The SPDR retail ETF (NYSEARCA:XRT) is currently higher by 3%, poised to close the week in the green for the first time in three weeks.
The University of Michigan Consumer Sentiment Index rose to its highest level since May, beating expectations, while the index measuring current conditions increased to 62.9. The index for consumer expectations rose to 73.0 from 72.1, also topping expectations.
The gain was led by improved buying conditions for durables, driven by more favorable prices, while the outlook for personal finances and the economy also improved despite a modest weakening in view of the labor market.
“Sentiment is now about 40% above its June 2022 low,” said Survey of Consumers Director Joanne Hsu, adding, however, that sentiment remains guarded into the upcoming presidential election.
Adding to the buoyant tone for certain internet retailers, including Etsy (NASDAQ:ETSY), Wayfair (NYSE:W), Chewy (NYSE:CHWY), and Beyond (NYSE:BYON) — all of which are up 5%-7% — is the government’s efforts to curb the import of merchandise from China that exploit the de minimis exemption.
Among stocks in the luxury category, the more encouraging consumer outlook is amplifying a post-earnings rally in Signet (NYSE:SIG) and permeating throughout the sector with shares of Movado (NYSE:MOV), Brilliant Earth (NASDAQ:BRLT), and The RealReal (NASDAQ:REAL) outperforming.
In the casino/resort segment, Penn Entertainment (NASDAQ:PENN) and Caesars Entertainment (NASDAQ:CZR) are the top-performing stocks, with gains in the former also attributed to insider buying. In a filing with the U.S. Securities and Exchange Commission, director David Handler bought 10K additional shares of Penn Entertainment, increasing his direct stake in Penn (PENN) to 293,450 shares. PENN set a three-week high and traded through resistance at the 200-day moving average.