Tariffs and trade policies have dominated market measures since April 2, but the March retail sales report could affect investors’ trust and positioning. According to Dow Jones, economists believe sales are rising for a month. Consumer spending to surpass the price of goods due to tariffs is considered the main catalyst for this increase. If retail sales reports are inline or better than expected, Jay Woods, Chief Global Strategist at Freedom Capital Markets, believes that retail stocks can experience short-term bounce. “Some of these names go a long way ahead of themselves in the downside of bounce being natural,” Woods said, pointing to the SPDR S&P Retail ETF (XRT) and Home Depot as two examples. “They’ll be beaten and mean that their return could lead to great gatherings in the coming days.” XRT and Home Depot are below the 52-week highs, at 22% and 19%, respectively. From now on, XRT has decreased by 17% and Home Depot has decreased by around 9%. Callie Cox, chief market strategist at Ritholtz Wealth Management, also sees the possibility of a consumer discretionary stock conflict behind the strong report. “Consumer discretionary stocks have been hit so hard that they can be susceptible to relief rallying behind the scenes of retail sales reports that don’t show that the economy is falling apart,” Cox said. The Consumer Discretionary Select Sector (XLY) lost more than 15% this year. Others are inferior to the report. “It can’t hurt, it can’t improve,” said Malcolm Ethridge, who thinks the numbers will miss expectations despite the potential for sales. “I’m going to sell retailers in the short term,” he said. “I don’t think the reports can be published to make these positions better.” Jimmy Lee, founder of Wealth Consulting Group, expects a softer retail sales report than estimates, and believes their weaknesses can range from travel and leisure. “I think any trips booked now for summer vacation will be booked for summer vacation to Europe. Smartplay is moving ahead of the report. “I don’t think you’ll see some blow-off reports,” Lee said.
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