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The first legitimate rally attempt amid this latest market correction is clearly underway.
US markets resumed their momentum from late last week, rallying sharply on headlines that the next set of President Trump’s tariffs will be slimmer than expected. President Trump said on Monday afternoon that he may provide “a lot of countries breaks” in regards to the proposed reciprocal tariffs, which are due to be implemented on April 2nd.
This past Friday’s “triple witching” event – wherein a set of options contracts expired that were tied to stocks, indexes, and ETFs to the tune of about $4.5 trillion – brought enhanced volume that favored the bulls. The move pushed the major US indexes into the green, helping the Nasdaq and S&P 500 snap a 4-week losing streak.
It’s understandable that any meaningful rally would see the more oversold pockets of the market (like tech and consumer discretionary) bounce the most. And sure enough, the past few trading sessions have seen these two areas (along with communication services) round out the top sectors in terms of performance.
Given lower asset prices this year along with lingering inflation and tariff concerns, consumers have been less confident in this environment. Back in February, the Conference Board’s Consumer Confidence Index fell 7 points to 98.3, marking the steepest 1-month decline since August 2021. The reading was also the lowest level in 8 months; we’ll get the March figures on consumer confidence later this morning.
But as we’ve seen, consumers don’t always match their feelings with their actions. Restaurant spending is one area that has held up well, which could translate to significant upside ahead for certain discretionary stocks.
Olive Garden Parent Soars to Record High Following Earnings Results
Casual dining chain Darden Restaurants DRI reported quarterly earnings results late last week. The company earned $2.80 per share during its fiscal third quarter, slightly below the $2.81/share Zacks Consensus Estimate. Sales of $3.16 billion improved 6.2% year-over-year but also fell short of analysts’ expectations.
The Orlando, Florida-based company’s portfolio is comprised of casual restaurants such as Olive Garden and LongHorn Steakhouse, as well as fine dining establishments like The Capital Grille, Eddie V’s Prime Seafood, and Seasons 52. A Zacks Rank #3 (Hold) stock, Darden Restaurants operates more than 2,100 locations in the United States and Canada.
At its flagship restaurant in the Olive Garden, revenues increased 1.5% year-over-year to $1.33 billion. Darden CEO Rick Cardenas pointed out the fact that changes in consumer sentiment aren’t being reflected in consumer spending.