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How US-China Trade Tensions Have Affected the Consumer Sector

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What’s happened in the consumer sector

US-China trade war tensions continued to affect the consumer sector last week. The S&P 500 (SPY) fell 1.4%, with all of its sectors being affected by the technology sector slide as well. However, the retail sector gained last week.

Last week, China retaliated against proposed US tariffs on $50 billion in Chinese goods, applying tariffs to major American imports such as soybeans, planes, cars, beef, and chemicals. This retaliation escalated fears of a US-China trade war, affecting most S&P 500 sectors. The trade war could affect the consumer staples and discretionary sectors, specifically the food and beverage, agricultural, aircraft, and automobile sectors.

Consumer staples and discretionary companies’ stocks also fell last week. Consumer staples fell 0.28%, led by a decline in most stocks. Some meat companies benefited from lower soybean prices.

The consumer discretionary sector fell 0.66%. After releasing earnings results, Lennar (LEN) rose 4.5%, while CarMax (KMX) fell 2.6%. According to a FactSet report on April 6, based on the results of 23 companies, the S&P 500’s earnings are expected to grow 17.1% in 1Q18.

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Many consumer sector-based ETFs also fell last week, with the Consumer Discretionary Select Sector SPDR ETF (XLY) falling 0.6% and the Consumer Staples Select Sector SPDR ETF (XLP) falling 0.40%. In contrast, the SPDR S&P Retail ETF (XRT) rose slightly, by 0.43%. In 2018, the S&P 500 Consumer Discretionary has risen 2.1%, outperforming the S&P 500 and the S&P 500 Consumer Staples, which have fallen 2.6% and 8.0%, respectively.

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