Insider Monkey
Insiders Are Selling These 10 Retail Stocks
Fahad Saleem
9 min read

In This Article:

In this article, we will take a detailed look at Insiders Are Selling These 10 Retail Stocks. For a quick overview of such stocks, read our article Insiders Are Selling These 5 Retail Stocks.

The strength of the US consumer has kept the market surprised and baffled over the past several months, as the Fed continues to battle inflation that remains sticky amid strong consumer spending. The National Retail Federation recently said in a report that it estimates retail sales to increase in the range of 2.5% and 3.5% in 2024, compared to retail sales growth of 3.6% recorded last year.

Jack Kleinhenz, the chief economist at the NRF, said that consumers have shown “much great resilience than expected” and “it’s hard” to be bearish on the consumer. Most of this strength comes from household savings accumulated during the pandemic days.

But Kleinhenz wondered whether this consumer resilience will continue in the future since inflation begins to bite and savings diminish.

When the pandemic hit, US consumers began spending money on goods instead of experiences and services amid lockdowns. But immediately after the lifting of pandemic-related restrictions, Americans began spending a fortune on experiences. However, Bank of America in its “Consumer Checkpoint” report published in January said that its Winter Spending Survey showed that consumers were planning to decrease spending on dining out, takeout, social events and experiences

Bank of America said it surveyed about 2,000 consumers in the US and found that a whopping 59% of the consumers were planning to start 2024 with caution, with intentions to save money and cut back on spending.

So far this year, retail and consumer stocks remain strong. VanEck Retail ETF (NASDAQ:RTH) is up about 12.2% in the first quarter of 2024, compared to a 10.2% gain for the S&P 500. Investors would be watching Q1’2024 earnings of retailers closely to see how the US consumer is reacting to the changes in inflation and wage growth. Some analysts are also hopeful that rate cuts would bode well for retail stocks.

Back in December, a Wall Street Journal report cited Jay Woods, chief global strategist at Freedom Capital Markets, who said at the time that consumer has been “resilient throughout it all.” Woods said that the overall sentiment was that it’s “OK, we aren’t going to be in a recession. Things are getting little bit better.”

Canaccord’s Tony Dwyer recently talked with CNBC and said that the Federal Reserve would need to get “aggressive” when it comes to rate cuts and should not keep interest rates higher for longer to avoid massive layoffs and recession. Dwyer believes consumer discretionary stocks, along with healthcare and financials, are some of the areas to pile into if you want to benefit from the rate cut environment.

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