Retail sales in the United States increased 5.3% in January from the previous month, much better than expected. A Conference Board measure of consumer confidence improved again in February after rising in January.
However, the coming months could still be difficult. Macy’s CEO Jeffrey Gennette told analysts he believes current trends will hold for the first half of the year. That would mean home businesses and some luxury lines like designer skin care continue to thrive, while apparel sales – especially formal wear – are expected to remain weak. He predicted that clothing sales would start to recover in the second half of 2021.
The point is, Macy’s troubles won’t end with the pandemic.
Macy’s has cut costs and is trying to switch to online sales. He predicts that about $ 10 billion in sales will be digital by 2023. But even his most optimistic forecast for net sales for his current fiscal year is more than 15% lower than he reported in the last year. fiscal year 2019. This is not a good sign.
“Investor Group’s belief that change is necessary stems from the company’s performance in the decade leading up to 2020, before the pandemic, and the implication for future performance, once the economy reopens, due to the company’s systemic inability to execute a plan that creates shareholder value, ”the group said in a letter Monday.
But the action clearly shows that even after the pandemic has passed, the way forward for struggling retailers remains uncertain. This makes the large increases in stock for department stores a little squeaky.
Jerome Powell calms nervous markets
Investors are desperate for reassurance that central banks won’t change their plans to stimulate the economy anytime soon.
“The best thing [the Fed] can do about this is to maintain accommodative monetary policy, ”he said.
Investor insight: Powell’s remarks calmed unruly markets, allowing the S&P 500 to break a five-day losing streak. The Nasdaq Composite closed 0.5% lower on Tuesday, after falling more than 3% earlier in the session.
Very low interest rates and huge bond buying programs have fueled the euphoria that has gripped the markets since last March. But the mood has changed in recent days as Wall Street assesses the risk that a strong economic recovery this spring and summer could push prices up, forcing central banks to raise interest rates or curb purchases of ‘bonds sooner than expected.
This triggered a rise in government bond yields, which move opposite to price, and a selloff in tech stocks, which have been among the best performers during the pandemic.
Coming up: Investors are not out of the woods yet. Powell’s testimony is expected to continue on Wednesday, this time before House lawmakers.
If he sticks to Tuesday’s scenario, Wall Street could be appeased.
“Its success struck a balanced tone,” Stephen Innes, chief global markets strategist at Axi, told clients on Wednesday.
If Powell had been too accommodating, Innes said, he “risked exacerbating short-term inflation fears.” If he had been too hawkish, it might have fueled fears that the Fed was letting its foot off the pedal.
5 reasons Tesla’s stock is crashing
After a year of breakneck gains, one of the hottest stocks in the world is retreating.
Investors may also have simply acted too quickly, notes Chris. Tesla shares peaked a day before a report on earnings fell short of Wall Street expectations. CEO Elon Musk also warned the company was scrambling to source enough batteries.
Another from me: Tesla has been a major beneficiary of the recent wave of risk-taking in the markets. It is therefore not surprising that its action suffers as sentiment becomes more cautious.
Shares are up 4% in pre-market trading, indicating that the rout may have taken its course. But the recent drops are a reminder that Tesla’s dramatic rise to power leaves it vulnerable to big drops and its rich valuation is not a given.
- Federal Reserve Chairman Jerome Powell testifies before the House Financial Services Committee at 10 a.m. ET.
- New US home sales for January are also posted at 10 a.m. ET.