{"id":9794,"date":"2023-09-10T18:48:52","date_gmt":"2023-09-10T18:48:52","guid":{"rendered":"https:\/\/prosfunds.com\/news\/when-will-consumers-stop-buying-more-stuff-its-a-key-question-for-the-stock-market-in-the-week-ahead\/"},"modified":"2023-09-10T18:48:53","modified_gmt":"2023-09-10T18:48:53","slug":"when-will-consumers-stop-buying-more-stuff-its-a-key-question-for-the-stock-market-in-the-week-ahead","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=9794","title":{"rendered":"When will consumers stop buying more stuff? It\u2019s a key question for the stock market in the week ahead."},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002483859\" role=\"document\">\n<p>Consumer spending has defied Wall Street expectations all year, both by keeping stocks afloat near record levels and by preventing the U.S. economy from running aground into a recession.<\/p>\n<p>That\u2019s why sentiment around stocks in the week ahead could hinge on two related economic data points: the consumer-price index (CPI) for August due on Wednesday and monthly U.S. retail sales slated for a day later. <\/p>\n<div class=\"paywall\">\n<p>\u201cThey are hanging in a lot longer than we all gave them credit for last year,\u201d said Jason Blackwell, chief investment strategist at The Colony Group, of the willingness of consumers to spend, despite credit-card interest rates eclipsing 20% and inflation still above the Fed\u2019s 2% annual target rate. <\/p>\n<p>\u201cOur view is that the consumer does remain fairly healthy and is able to keep up with prices increase,\u201d he said.<\/p>\n<p>The yearly CPI bumped up to 3.2% last month, but has declined from a peak of 9.1%  last year. Blackwell will be watching Wednesday\u2019s economic update for signs of easing in shelter, a \u201csticky\u201d kind of inflation, which in July was pegged at 7.7% yearly, even though home prices in the past year have fallen. \u201cThere\u2019s a disconnect that needs to narrow, at some point,\u201d he said.<\/p>\n<p>The sharp rise in mortgage rates has been less damaging to the housing market than it might have been in an earlier era. That\u2019s because most homeowners already refinanced at historically low pandemic rates, providing a buffer as the Fed raised its policy rate to a 22-year high.<\/p>\n<p>A decade of underbuilding also has kept prices from tumbling, even as sales dropped, leaving many people with a big equity cushion in their homes. At the same time, wages have been rising and the economy has refused to capitulate. <\/p>\n<p>Putting it all together suggests a recipe for continued spending, particularly with household debt-to-incomes still near a 20-year low of about 100%, according to Mizuho Securities.<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<p>          <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>\u201cThe market has been expecting a recession for the past year or so, and has been wrong,\u201d said Michael Rosen, chief investment officer at Angeles Investments. \u201cIn some sense, they probably are still looking for a recession. I think that\u2019s also wrong.\u201d<\/p>\n<p>That\u2019s because Rosen views today\u2019s higher interest rates as less ominous than others might think, especially with wage gains and strong households balance sheets able to keep the economy humming, even if spending largely has exhausted pandemic savings. <\/p>\n<p>\u201cThere has been some weakness in the manufacturing sector, but it\u2019s the consumer that dominates our economy,\u201d Rosen said. That has been reflected in recent economic data but also in jammed airports, restaurants or at one of Beyonc\u00e9\u00a0or Taylor Swift\u2019s sold out summer concerts, he said.  <\/p>\n<p><strong>Related: <\/strong>There\u2019s a new star of the U.S. economy this summer: women. \u2018Is this how men have always felt?\u2019<\/p>\n<p>In July, sales at U.S. retailers reflected the biggest increase in six months. Higher energy prices could play a role in looming economic data for August. But Rosen still views the backdrop for stocks and short-term Treasury securities as favorable.<\/p>\n<p>\u201cThe market climbs a wall of worry and that\u2019s exactly what\u2019s been happening here,\u201d he said, adding that he expects stocks to move higher. \u201cWhat drives markets is profits and corporate profits are strong.\u201d<\/p>\n<p>John Butters, FactSet\u2019s senior earnings analyst on Friday said he\u2019s forecasting a net profit margin for the S&amp;P 500 index of 11.7% for the third quarter, which would be above the 11.6% figure for the previous quarter and above the 11.4% five-year average.<\/p>\n<p>\u201cInvestors tend to have short memories,\u201d Rosen said, pointing to a Fed funds rates that hit double-digits in the 1980s. but staying high as the economy expanded for most of the decade. \u201cFive percent is a pretty normal interest rate,\u201d he said. \u201cI\u2019d even go further and say zero interest rates are harmful for the economy.\u201d<\/p>\n<p>U.S. stocks closed the week lower, with the S&amp;P 500 index<br \/>\n        SPX<br \/>\n       down 1.3% for the week, the Dow Jones Industrial Average<br \/>\n        DJIA<br \/>\n       0.8% lower and the Nasdaq Composite Index<br \/>\n        COMP<br \/>\n       shedding 1.9% for the week, according to Dow Jones Market Data.<\/p>\n<p>Bigger picture, the Dow ended Friday only 6% away its record high set in January 2022, while the S&amp;P 500 was 7% below its prior peak. Yields on 3-month<br \/>\n        BX:TMUBMUSD03M<br \/>\n       and 6-month<br \/>\n        BX:TMUBMUSD06M<br \/>\n       Treasurys have been above 5% since this spring. <\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/when-will-consumers-stop-buying-more-stuff-its-a-key-question-for-the-stock-market-in-the-week-ahead-d3b1d698?mod=economy-politics\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Consumer spending has defied Wall Street expectations all year, both by keeping stocks afloat near record levels and by preventing the U.S. economy from running aground into a recession. That\u2019s why sentiment around stocks in the week ahead could hinge on two related economic data points: the consumer-price index (CPI) for August due on Wednesday [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":9795,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[38],"tags":[],"class_list":{"0":"post-9794","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>When will consumers stop buying more stuff? 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