In Tuesday’s trading session, stock markets fell. They did not like this one report: the U.S. retail sales.
Retail sales rose more than markets expected in November. Purchases in motor vehicles and online merchandise strengthened. Unexpectedly, high automotive prices did not weaken demand. Overall, retail sales increased by 0.7%. In October, the Commerce Department upwardly revised sales growth to 0.5%. In November, retail sales rose by 3.8% Y/Y.
Layoff rates slowed in the month, increasing the consumer’s spending power. In addition, employment growth remains strong. This data suggests that another 25 bps cut will fuel inflation substantially. Though the market expects this cut, it is now pricing in a higher chance of fewer to no rate cuts in 2025.
Investors may gain exposure to the strong retail market. Companies like Best Buy (BBY), Ford (F), and General Motors (GM) would benefit from stronger sales. Lululemon (LULU) is a better investment idea since it has a unique brand, premium prices, and strong growth momentum.
Shopify (SHOP), an e-commerce platform, enables merchants to sell goods online. SHOP stock still has room to trade higher. This is despite the stock’s 53.39% YTD return.
For diversified exposure to the retail market, investors may hold conglomerates like Johnson & Johnson (JNJ), Proctor & Gamble (PG), Haleon (HLN), and Kenvue (KVUE).
