The University of Michigan publishes a monthly economic index that tracks the confidence level of the average American consumer.
This key indicator of American consumer sentiment took a significant hit during the month of July. Via the Wall Street Journal, UM’s consumer-sentiment index fell from 93.5 to 90.0 from June to July. That’s a whopping 4% drop from month to month.
The drop in consumer sentiment reflects the average American’s growing concern over future economic fluctuations. This can be attributed to domestic factors such as stagnant wages and minimal job creation, along with international factors such as the Brexit vote and the volatile Chinese economy.
And with the relatively large drop in consumer sentiment, comes weary investors staying clear of the retail and apparel industry (an industry highly dependent on a consumer’s willingness to spend).
As you can see, the stock market isn’t taking the decrease in consumer sentiment lightly. 8 of the 9 retail/apparel stocks shown above are down big time today. The 1 stock of the group that isn’t, Macy’s, is barely in the green.
The list above also exemplifies that underlying uncertainty exists in all levels of the retail industry, from large-scale retailers (JC Penny, Kohls), to luxury retail (Kate Spade, Michael Kors), to basic consumer products (Hanes, Procter & Gamble).
Sidenote: I feel for anyone that has a concentrated investment in Kate Spade. -20% in the red on a single day is tough for anyone to stomach.