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Real-Time Insight

Below the surface of today’s positive price action, the ICSC Chain Store Sales index hit a new high for the year. The July 4 weekend saw healthy consumer demand, and is propelling retail shares to new highs basis the SPDR S&P Retail ETF (XRT - ETF report). The strength in the retail sector has come despite a material slowdown in refinance activity in recent weeks. The bid in the retail sector is complemented by the banking sector where the SPDR S&P Bank ETF (KBE - ETF report) is at new highs, and overcoming a few downgrades and talk of higher leverage ratios for large institutions.  A positive factor for the overall market rests in the strength of the bank and consumer sectors.   Nothing is absolute, but a market seeing strength in banks and retailers should support the confidence of buyers.   

Given the strength of retail names and signs the consumer is healthy, it may be worth checking out a few Zacks #1 Rank (Strong Buy) retailers like Wet Seal (WTSL - Analyst Report) Dillard’s (DDS - Analyst Report), or Bon Ton Stores (BONT).

What do you think:  Will the banks and the retailers lead the S&P 500 to new highs?

Prior to employment at Zacks, Nick Kalivas was an equity index and interest rate strategist for the World’s largest non-bank futures broker and provided research consulting services to a commodity trading advisor.   He was a featured contributor on the Chicago Mercantile Exchange’s Commentary Webpage, has won forecasting awards from the Chicago Federal Reserve Economic Symposium, and has appeared as a market expert in both print and broadcast media. 

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