{"id":23585,"date":"2023-06-16T15:17:40","date_gmt":"2023-06-16T19:17:40","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/the-consumer-led-recession-youre-worried-about-actually-ended-months-ago-the-stock-market-says\/"},"modified":"2023-06-16T15:17:42","modified_gmt":"2023-06-16T19:17:42","slug":"the-consumer-led-recession-youre-worried-about-actually-ended-months-ago-the-stock-market-says","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=23585","title":{"rendered":"The consumer-led recession you\u2019re worried about actually ended months ago, the stock market says"},"content":{"rendered":"
\n

Based on the idea that the stock market\u2019s actions speak louder than those warning about an economic slowdown, the consumer-led recession many have been calling for appears to have ended months ago.<\/p>\n

And a chart of the consumer discretionary sector\u2019s strength relative to the broader stock market suggests the recovery, if not a new growth cycle, is well under way.<\/p>\n

\n

A relative-strength chart maps how one charted instrument performs against another. On that basis, the Consumer Discretionary Select Sector SPDR exchange-traded fund
\n XLY,
\n -0.10%<\/bg-quote>
\n has been outperforming the S&P S&P 500 ETF
\n SPY,
\n -0.29%<\/bg-quote>
\n since the end of last year, enough to suggest a new uptrend started this past week.<\/p>\n

Basically, what the stocks are saying appears to dispute the warnings in recent earnings reports from a number of retailers, including Target Corp.
\n TGT,
\n -2.55%<\/bg-quote>,<\/span>
\n Home Depot Inc.
\n HD,
\n +0.06%<\/bg-quote>
\n and Dollar General Corp.
\n DG,
\n -0.01%<\/bg-quote>,<\/span>
\n about weakening demand for discretionary items.<\/p>\n

<\/p>\n
<\/p>\n
<\/div>\n<\/figure><\/div>\n

\u201cThe consumer continues to be the star of the show and the market is sniffing it out,\u201d said Ryan Detrick, chief market strategist at Carson Group.<\/p>\n

The low in the chart hit in late April was higher than the low in late December, while the highs seen over the past week were above the high reached in early February. Many technicians on Wall Street believe a pattern of higher lows and higher highs is what defines an uptrend.<\/p>\n

The better-than-expected government retail sales report on Thursday was a fundamental confirmation of what the charts have been saying.<\/p>\n

Read<\/strong>: U.S. consumer sentiment rises to a 4-month high on easing inflation and end to debt-ceiling fight. <\/p>\n

The consumer\u2019s well-being is critical for the health of the overall economy, as consumer spending accounts for about 68% of U.S. gross domestic product.<\/p>\n

A longer-term chart suggests the consumer-led recession that many have been expecting for about the past year appears to have ended about six months ago.<\/p>\n

<\/p>\n
<\/p>\n
\n \"\"\n <\/div>\n<\/figure><\/div>\n

\u201cThe market is acting like the recession has already happened, and we\u2019ve entered the recovery,\u201d said Craig Johnson, chief market technician at Piper Sandler. \u201cThe consumer sector historically does very well coming off of bear market lows.\u201d<\/p>\n

There are those that say the performance of the consumer discretionary ETF, or XLY, should be taken with a grain of salt, since only two of its 53 components account for more than 40% of the ETF\u2019s weighting as of June 15 \u2014 Amazon.com Inc.\u2019s stock
\n AMZN,
\n -0.89%<\/bg-quote>,<\/span>
\n which carries a 25.0% weighting has run up 50% year to date and Tesla Inc. shares
\n TSLA,
\n +1.56%<\/bg-quote>,<\/span>
\n with an 18.7% weighting, have soared 113%. In comparison, the S&P 500 index
\n SPX,
\n -0.27%<\/bg-quote>
\n has gained 15% this year.<\/p>\n

But that\u2019s no reason to disregard the ETF\u2019s message altogether.<\/p>\n

Carson\u2019s Detrick said while Amazon and Tesla are certainly among the key reasons for the XLY\u2019s outperformance, there\u2019s a lot more to the sector\u2019s strength than just two stocks.<\/p>\n

\u201cThere are some really positive things happening under the surface,\u201d Detrick said. \u201cPeople are getting out there and spending.\u201d<\/p>\n

Other XLY components that have outperformed the S&P 500 this year come from a number of different subsectors, including cruise operators, home builders, other auto makers and sellers, travel bookers and casino operators.<\/p>\n

So rather than a \u201chard landing\u201d for the economy (a deep recession or another sharp stock market selloff) or a \u201csoft landing\u201d (a mild recession), Detrick said he\u2019s in the \u201cno landing\u201d camp.<\/p>\n

\u201cAs long as the consumer is still strong, we\u2019re not going to have a recession,\u201d Detrick said.<\/p>\n

Nasdaq\u2019s strength versus the Dow bodes well for the economy<\/strong><\/p>\n

Piper Sandler\u2019s Johnson said besides the strength in the XLY, there\u2019s another chart that suggests the recession has already ended:<\/p>\n

<\/p>\n
<\/p>\n
\n \"\"\n <\/div>\n<\/figure><\/div>\n

Johnson said the Nasdaq Composite
\n COMP,
\n -0.58%<\/bg-quote>
\n has outperformed the Dow Jones Industrial Average
\n DJIA,
\n -0.23%<\/bg-quote>
\n by more than 10 percentage points for a quarter at the end of five of the last five recessions.<\/p>\n

And for the first quarter that outperformance was by more than 13 percentage points, as the Nasdaq rose 16.8% and the Dow gained 3.4%.<\/p>\n

\u201cFor now, stocks are working, and the more the market keeps working, the more wealth people are going to [feel they] have,\u201d Johnson said.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Based on the idea that the stock market\u2019s actions speak louder than those warning about an economic slowdown, the consumer-led recession many have been calling for appears to have ended months ago. And a chart of the consumer discretionary sector\u2019s strength relative to the broader stock market suggests the recovery, if not a new growth […]<\/p>\n","protected":false},"author":1,"featured_media":23586,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-23585","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nThe consumer-led recession you\u2019re worried about actually ended months ago, the stock market says | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Based on the idea that the stock market\u2019s actions speak louder than those warning about an economic slowdown, the consumer-led recession many have been\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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