The retail sector has been hard-hit by a selloff in recent weeks, and despite a rebound on Wednesday, experts predict more challenges ahead as consumer spending becomes increasingly hard to predict.
The retail sector has seen a big sell-off in recent weeks.
According to reports, Kohl's is preparing to receive competing takeover offers and investors are hopeful that the company will raise its full-year sales.
The retail sector gotdecimated throughout earnings season, but positive headlines helped spur buying for the first time in weeks, says Vital Knowledge founder Adam Crisafulli.
The retail sector is down nearly 20% so far this month, despite a six percent gain on Wednesday.
Large retailers like Target and Walmart, among others, reported lackluster earnings last week and warned about inflationary pressures impacting profits, not only causing a sharp selloff in retail stocks but also leading to rising recession fears.
Wall Street analysts note a shift in consumer spending from goods to services which has impacted results, as companies dealing with supply chain issues last year wound up overstocking and are now faced with large inventories.
Retailers are sitting on an awful lot of inventory that will need to be flushed because companies are curtailing spending and hiring.
The pace at which consumer demand is changing is fast and hard to predict, which will pose a challenge for retailers who have traditionally relied on Americans to be predictable in their shopping patterns, says Andy Kapyrin, chief investment officer at RegentAtlantic.
The pivot in consumer spending from goods to services left many major retailers with inventory oversupply, and inflationary pressures plagued operating margins, according to the chief investment officer for Northern Trust Wealth Management. She points out that consumers are still healthy, with trends in travel and restaurant bookings reaching pre-pandemic levels. Not all retail earnings have been bad, either, including TJX Companies and Canada Goose.
The central bank will raise rates aggressively.
The stock market has been selling off as the tech shares have fallen.
The stock market selloff continues as major retailers are concerned about rising cost pressures.
According to Goldman, the worst case scenario for stocks is.
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