Mixed news about the state of mind of the American consumer has markets and exchange traded funds (ETFs) similarly mixed up. Wall Street is mostly flat this morning while it digests the reports.
The news about retail was not great. Sales slowed slightly in May, declining 1.2%, after gaining 0.6% in April and 2.1% in March. With analysts’ expectations hovering around a 0.4% increase, the decrease in consumer spending is the largest drop in retail sales in eight months, which casts further doubt over the strength of the domestic economy and its recovery.
On the other hand, though, consumer sentiment rose more than forecast to the highest point in 2.5 years. The report is based on interviews with 500 households each month, in which they’re questioned about their financial situation and overall mood about the economy. [Consumer Discretionary ETFs: Outperformance in 2010?]
- Consumer Discretionary Select Sector SPDR (NYSEArca: XLY)
Due to the unexpected fall in retail sales, a report analysts’ expected to reflect a 0.4% increase, markets have followed suit in early trading Friday morning with the renewed concerns over the U.S. economy’s health. The decline follows strong Thursday performance encouraged by upbeat global economic reports, which fits the volatile trend of late.
The health care sector got a boost this morning after reports that Pfizer (NYSE: PFE) and Bristol-Myers Squibb (NYSE: BMY) said they stopped a clinical trial on an experimental drug for irregular heartbeats because the early results show that it’s better than aspirin. Health care is leading all the other sectors so far today. [Biotech’s Super Bowl Could Boost ETFs.]
- Vanguard Health Care (NYSEArca: VHT): Pfizer is 8.7%; Bristol Myers is 2.9%
Aaron Hurst contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.