NEW YORK, Nov 25 (Reuters) - U.S. retail stocks held
steady on Friday as investors watched holiday spending to gauge
consumer confidence at a time when inflation and rising interest
rates are weighing heavily on Main Street.
Consumer discretionary stocks, measured by the S&P 500
Consumer Discretionary sector which benefits from
spending on retail, restaurants and vacations, edged up less
Stocks were muted as crowds were thin on what has
historically been the busiest shopping day of the year.
"If Black Friday shopping takes a hit this year, it
won't bode well for the rest of the holiday period which is so
important to retailers," said Craig Erlam, senior market analyst
Consumer discretionary stocks are down nearly 32% year
to date, more than double the 15.5% decline in the broad S&P 500
, as consumers have been walloped by surging inflation and
the swiftest increase in interest rates since the 1970s.
"These stocks are a clue as to how fast the economy is
slowing and whether slowing inflation is lifting confidence on
Main Street," said Jim Paulsen, chief investment strategist at
the Leuthold Group.
Ralph Lauren Corp, VF Corp and Autozone Inc
led the sector's slim gain on Friday, each adding more
than 1.7% compared with a less than 0.1% loss in the benchmark
Consumers spent a record $5.29 billion online on
Thanksgiving Day, according to Adobe Analytics data, up 2.9%
from a year ago, driven by big discounts in categories such as
toys and electronics.
The steepest Black Friday deals, named for the day after
the Thanksgiving holiday, were for toys, peaking at 34% off
listed price, electronics and computers.
U.S. consumer prices rose at a slower pace than economists
had expected in October, pushing the annual increase below 8%
for the first time in eight months and helping spark a broad
U.S. stock market rally on hopes that inflation had finally
peaked after hovering near 40-year highs.
Overall, the National Retail Federation, a trade group,
forecasts that holiday sales, including e-commerce, will rise
between 6% and 8% to between $942.6 billion and $960.4 billion
during November and December. That would come in below last
year's 13.5% jump and the 9.3% gain in 2020.
Retailers began offering unusually early discounts this
Target Corp, Kohls Corp and Amazon.com
Inc ran early Black Friday deals that discounted toys
and some other goods by as much as 50%.
Those companies did not respond to requests for comment.
Even with steep discounts, consumers will have to spend more
for popular products like a PJ Masks toy car or Mattel Inc's
Mega Hauler semi-truck because prices have risen faster
than promotions, according to data provided by DataWeave.
Mattel did not respond to a request to comment.
Shoppers are being wooed as the closely followed University
of Michigan consumer sentiment poll was revised up Wednesday to
up to 56.8 from 54.7, beating the consensus expectation of 55.0
but still below the 59.9 in October. Expectations for purchasing
long-lasting manufactured goods fell 21% due to high interest
rates and high prices, the survey found.
"The sentiment data has been sliding sideways as consumers
try to reconcile solid economic and labor market conditions
against expectations of a recession and harmful inflation," said
Thomas Simons, an economist at Jefferies LLC.
(Reporting by David Randall; Editing by Nick Zieminski, Anna
Driver and Richard Chang)