U.S. retail stocks rise after Democrats sweep Congress
XLY•U.S. retail shares rose after Democrats seized control of the Senate and House in midterm elections, with Dollar Tree up 10% and several major retailers and consumer brands gaining 3% to 7%. Oil prices fell 9% on Wednesday.
1. Retail shares gain
The S&P 500 Consumer Discretionary index rose 5%, leading gains in the S&P 500. Walmart, Costco and Target shares gained between 3% and 5%, while Best Buy and Macy’s rose 7% each. Dollar Tree added 10% and Dollar General 6%.
2. Other consumer stocks rise
Cruise operators Carnival, Norwegian Cruise Line Holdings and Royal Caribbean gained about 6%. Nike and Lululemon rose 6% each, while Mattel and Hasbro were up about 3% each. Oil prices fell 9% on Wednesday after Republicans lost control of Congress in the midterm elections.
3. Costs and spending pressure
Consumer goods companies have struggled with higher packaging and transport costs following higher oil prices, while high gasoline prices have pressured consumer spending. Annex Wealth Management chief economic strategist Brian Jacobsen said consumers have made difficult budget choices and that relief at the pump could free up discretionary spending power. The Consumer Discretionary index was down 0.46% year to date as of the last close.
