Weaker US Retail Sales and the S&P 500 Index
US retail sales in April
According to data provided by the United States Census Bureau on May 12, 2017, US retail sales rose 0.40% in April 2017, which was below market expectations of a 0.60% rise. Sales rose 0.10% in March 2017.
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Components of retail sales
Retail sales were mainly driven by the improvement in motor vehicle sales. Core retail sales, which most closely reflect the performance of the consumer spending segment of the GDP, remained unchanged in April 2017.
Fund managers’ view
Retail sales are an important economic indicator. Recently, BlackRock CEO (chief executive officer) Larry Fink said in an interview with CNBC that confidence in the US economy hasn’t translated into sales. On a monthly basis, US retail sales (VFINX) (VOO) (SPY) have slowed down, missing market expectations. Fink said that if the retail sales don’t show a solid performance, it could affect economic growth.
Falling retail sales indicate that consumer participation is gradually decreasing. The SPDR S&P Retail ETF (XRT) rose nearly 3.9% in April 2017, and the SPDR S&P 500 ETF (SPY) rose nearly 1.1%. If retail sales, inflation, and PMI (Purchasing Managers’ Index) figures improve in the near future, they could boost market sentiment. If these leading indicators continue their weak performances, it could hamper the market.
In the next part of this series, we’ll look at the US Consumer Sentiment Index in May 2017.