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Retailers Weighed Down the Consumer Discretionary Sector

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Dec. 1 2015, Updated 8:46 a.m. ET

Chinese woes over the energy sector

Chinese equities fell on Friday, November 27. The Direxion Daily FTSE China Bull 3X ETF (YINN) fell by 8.4%. The Chinese government issued investigations into major brokerage houses for suspected trading violations. The panic that aroused in the world’s second-largest fuel consumer seemed to impact the energy sector on the day.

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Sector performances

The above graph illustrates the performances of component sectors of the SPDR S&P 500 ETF (SPY) as of November 27.

Walt Disney and retail stocks weighed down the consumer discretionary sector

Walt Disney (DIS) fell 3% on November 27, 2015, after the company reported a fall in subscribers to its sports cable television channel, ESPN. The subscribers fell to 92 million in 2015 from 95 million in 2014.

Retailers including Urban Outfitters (URBN), Under Armour (UA), and Gap (GPS) fell by 2.7%, 2.6%, and 2.5%, respectively, on the day. These retailers are into apparel retail. They forecasted a weak sales outlook ahead of the holiday season.

The retailers that experienced a rise in stocks on November 27 were Bed Bath & Beyond (BBBY), Costco Wholesale (COST), PetSmart (PETM), and Yum! Brands (YUM). They rose by 0.5%, 0.7%, 0.7%, and 0.5%, respectively, on the day.

Finance sector

With the rising likelihood of a rate hike at the Fed’s December meeting, the finance sector rose on Friday, November 27. The rise in the interest rates will lead to an increased borrowing cost. Also, the profit margin for the lending banks will widen. Therefore, bank and investment brokerage stocks, namely JPMorgan Chase (JPM), Wells Fargo (WFC), Bank of America (BAC), Goldman Sachs (GS), and Morgan Stanley (MS) rose by 0.5%, 0.3%, 0.2%, 0.7%, and 0.5%, respectively, on the day.

In the next part of this series, we’ll analyze how moving averages impacted the gain in the consumer staples sector.

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