Author: Nikki-Lee Birdsey
Estimated read time: 3 minutes
Publication date: 31st Jul 2020 10:52 GMT+1
At one point, around 90% of the United States was in mandatory lockdown, and local economies slowed as business halted. In May, many U.S. states including New York, the former epicentre of the virus, began to gradually lift stay-at-home orders, re-open businesses, and lift other lockdown measures. In June, we saw a bounce back in the stock market for many sectors, including the retail sector, as consumers purchased more after a pent-up desire to shop built up over lockdowns.
Examples of retail that rose
Retail stocks for brands such as Lululemon, Nike and Adidas rose in May as these companies experienced a spike in retail sales. Many people turned to athletic wear during the Covid-19 pandemic, and this was reflected in sales when stores re-opened. In July, this positive retail trend continued with sporting goods. Shares of Big 5 Sporting Goods Corp more than doubled in active trading in early July, to keep up with all the premarket gainers, after the sporting goods retailer released positive preliminary results for the fiscal second quarter. Trading volume also surged.
As of Monday, the SPDR S&P 500 Retail ETF (AMEX: XRT) was up 1.10 percent.
But analysts have pointed out that the bump in consumer sales could be temporary. Here are a few reasons why. Covid-19 has continued to peak in the United States and states such as Florida, which has seen cases soar, are considering closures again. U.S. President Trump, who has remained optimistic on the virus going away, has recently changed his mind, stating that the pandemic will get worse before it gets better and donning a face mask in public.
Further, economists have warned that as the eviction moratorium expires and the U.S. federal unemployment benefits are set to stop, there will be a contraction in consumer spending. There has also been a contraction in consumer markets in Europe with the onset of new U.S. trade tariffs, such as falls seen in the wine market in France.
The contentious U.S. political environment renders more stimulus and economic relief uncertain during an already on-edge and acerbic election year. Protests in support of the Black Lives Matter movement and socio-economic reform continue. The recent controversies in Portland, Oregon, that saw President Trump dispatch federal agents to quell protests have people further questioning their desire to shop and return to a new normal. The usually buoyant summer season has been marked with questions of will schools reopen amid a second-wave virus, and economic fears that have put strain on families as they curb spending in an uncertain economic future.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
Copyright © 2016-2023 Finscreener.org. All Rights Reserved.
Disclaimer: Before deciding to trade you should carefully consider your investment objectives, level of experience and your risk appetite. Forex and Tradegate data is a real-time with a 30 second refresh. Prices may not be accurate and may differ from the actual market price. Prices on the website are indicative and solely for informational purposes, not for trading purposes or advice. Please be aware of the risks associated with trading the on financial markets, it is one of the riskiest investment forms. Past performance does not guarantee future profits. We take no responsibility for any losses that may arise as a result of the data contained on this website. The content and the website are provided "as is", without any warranties. In no event will Finscreener.org, its employees, owners, directors, affiliates, partners, data provider, third party or anyone else liable to anyone else for any decision made regarding information on this website.
General partner of Finscreener is SLOVAKODATA, a.s.
Looks like you are using AdBlock.
The revenue earned from advertising enables us to provide the quality content you are trying to reach on this website. In order to view this page, please disable AdBlock or purchase Premium.
Sign in if you already have Premium account.
This could take some time, please wait.