Despite all of the challenges facing the economy over the past year, retail has been one of the strongest sectors of the market.
The best way to judge the sector is to take a look at XRT, the S&P Retail ETF, which is up 16.5% so far in 2012, showing just how bullish investors are on the sector.
There has been a lot of concern, however, about the upcoming holiday shopping season. The recent election was heavily focused on the economy, and with pro-Romney forces running so many negative ads about the terrible shape the economy is in; it would be easy to believe that the nation’s economy is about to grind to a stop.
There was a real fear that the negative campaigning would impact consumer sentiment, but luckily that has not been the case. In fact, we are seeing the exact opposite. Consumer sentiment rose to a five-year high last month, pointing to a very strong holiday shopping season.
We saw the first signs of this earlier this week when Macy’s (M) boosted its full-year guidance. Macy’s was the first major retailer to report. The company put up strong quarterly numbers and boosted its full-year guidance.
If consumer sentiment remains high through the end of the year, we expect to see very impressive sales figures this holiday season.
Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. In addition to writing for Fresh Brewed Media, Michael also wrote for AOL's BloggingStocks for three years, focusing most of his attention on the energy and technology sectors.