Holiday season ushers in retail stock jitters NEW
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Holiday season ushers in retail stock jitters
NEW YORK (MarketWatch) — Investors will be closely watching the holiday hysteria that’s soon to overtake the stores and shopping malls of America, especially as Wall Street fears the coming holiday season could be a dud for retailers.
Analyst expectations are skewed to the negative, with some suggesting this holiday season could be on track for its worst performance since 2008. Morgan Stanley said last month that weak holiday sales could force stores to begin promoting their merchandise more intently.
The day after Thanksgiving is the unofficial kickoff of the holiday shopping season, but retailers have begun to pull forward their opening times to the Thanksgiving holiday itself as they jockey for a head-start on the competition. With retailers on edge, the back-and-forth is already getting testy as companies like Wal-Mart Stores Inc. (NYSE:WMT) tussle to match rivals’ Black Friday deals a week early.
The holiday season is generally the most profitable time of the year for retailers, but it also has a broader impact on the direction of the stock market. The department stores, apparel shops, and other retailers that make up the consumer discretionary sector of the S&P 500 index (SNC:SPX) contribute 12.5% of the total market capitalization of the index, making it the fourth-largest sector of the market as of Thursday, according to S&P Capital IQ.
The consumer discretionary sector of the S&P 500 has been going gangbusters this year, climbing 36.6%, while the Select Sector SPDR-Consumer Discretionary exchange-traded fund (NAR:XLY) is similarly up 36.7%, hitting a record earlier this month. That outperformance has supported the broader S&P 500, which is up 26.5% this year.
Nonetheless, the bulk of the sector’s gains came in the first half of the year, before the outlook began to deteriorate. And investors got a taste of what could be in store for the rest of the year when a number of prominent retailers reported disappointing profit outlooks this past week. http://www.marketwatch.com/story/holiday-seas...2013-11-24
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