Tuesday, July 28, 2009
Bloomberg reports on the decline in the Conference Board's consumer confidence index following the recent sharp reversal in the other major gauge of the consumers' mood - the University of Michigan's consumer sentiment index.
Perhaps these are indications that there are two diverging views on the nascent economic recovery - the rosy view of stock market traders and investors as opposed to a less optimist outlook where it really matters.
U.S. stocks fell and the Standard & Poor’s 500 Index retreated from an eight-month high as consumer confidence trailed projections and companies from Office Depot Inc. to Coach Inc. posted worse-than-estimated results. Oil and metal prices slid, while Treasuries climbed.That's a pretty hefty one-two punch from the consumer sector in just the last couple weeks.
American Express Co., Intel Corp. and Exxon Mobil Corp. helped lead the Dow Jones Industrial Average lower after the Conference Board’s index reinforced concern that higher unemployment will undermine consumer sentiment. Office Depot, the second-largest business-supply retailer, tumbled 17 percent and Coach, the biggest U.S. maker of luxury leather handbags, lost 5.6 percent.
Charts from Econoday depict the recent change in consumer confidence today:
And in consumer sentiment from last week:
Naturally, it will be interesting to see how equity markets respond to these developments as there will be little new data on the consumer sector for more than two weeks when July retail sales and consumer sentiment are reported.