Can Investors Believe This Rally? | So Good News


GDP data painted a picture of the US economy this week.

However, inflation is still rising.

The price of PCE increased by 0.3% in one month and increased by 6.2% from last year. It is still a long way from the Fed’s 2% inflation target.

Consumer spending rose slightly as sentiment rose more than expected.

GDP numbers, including consumption, only tell part of the story. Consumer discretionary can be distinguished from consumer goods, a group of companies that produce necessities on a daily basis.

As represented by XLY, consumer discretionary was above the last five days by 2.0%, and consumer demand, defined by XLP, was more than twice – 4.5% per week.

Consumer Discretionary is defined by the Consumer Discretionary Select Sector SPDR ETF (XLY) and Consumer Staples is defined by the Consumer Staples Select Sector SPDR ETF (XLP). This chart shows the average price, or price spread, of consumer spending in the economy as of 2020.

xly xlp Consumer etf price index for the year 2022

The chart above shows that consumers are the winners from December 2021.

Is it too early to declare that the US economy has reached a corner?

xrt retail sector etf stock price analysis October 31

Like the CPI earlier this month, the latest PCE figures released on Friday confirm the stability of inflation and provide more evidence that the US economy is facing headwinds.

Granny Retail (XRT) is the backbone of our economy, and if consumers can’t afford to live comfortably and continue to spend, this could be a problem.

Families are cutting back on impulse purchases. In addition, people doubt that the Fed has the backbone to reduce inflation.

Americans are using credit cards to pay for major purchases. US credit card debt is back to epidemic, as seen below.

Consumer credit card debt to rise in 2022 United States

A recent Census Bureau survey found that four out of 10 households report having difficulty making ends meet.

Consumer spending is generally less affected by inflation than discretionary spending, so changes in consumer spending can cause problems for companies that produce high-quality goods and services.

Even so, Granny Retail (XRT), a basket of smart shoppers and food favorites, is still in business for now.

However, with wages rising and the Fed continuing to tighten, it remains to be seen how long this will last.

It’s important to remember that while markets may look strong in the short term, they can turn around quickly – so investors need to be careful and manage risk.

If you’re looking to stay ahead of the curve, it’s important to monitor consumer behavior. With the MarketGauge trading platform and Mish’s premium service, you’ll get insights on today’s fast-moving markets to beat the market.

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Analysis and Summary of Stock Market ETFs:

S&P 500 (SPY) 386 support and 394 resistance level to check

Russell 2000 (IWM) 181 support and 186 resistance

Dow (DIA) 326 support and 333 resistance

Nasdaq (QQQ) 277 now support and 284 resistance

KRE (Regional Banks) 62 support and 65 resistance level

SMH (Semiconductors) 188 support and 195 resistance

IYT (Transportation) 208 support and 214 resistance

IBB (Biotechnology) 127 support and 132 initial resistance.

XRT (Commodity) 61 support and 65 resistance

Twitter: @marketminute

The author may be responsible for the securities mentioned at the time of publication. Any views expressed herein are solely those of the author and do not necessarily represent the views or opinions of any other person or organization.


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