Bears: You might want to reconsider your position in the near term for stocks. The money we were spending on higher priced gasoline is now going out the door for other retail. Unless oil goes back up I’d bet on a strong holiday retail season. At the very least, bears should wait for additional earnings reports next week before getting out of the stock market or buying into inverse index funds.
The markets were caught off guard Friday by a 0.4 percent decline in September retail sales. The drop reported by the Commerce Department stemmed from a 9.3 percent decline in spending on gasoline. Spending increased in other areas, however.
Malone said he believed the retail sales figure was positive because it showed consumers spent elsewhere as prices at the pump retreated. “For all the talk of the death of the consumer, that is definitely not manifesting itself.”
Indeed, consumers have grown more upbeat as gas prices have fallen. The University of Michigan’s preliminary consumer sentiment figure, released Friday, was a stronger-than-expected 92.3 for October. That compares with a 85.4 reading for September.
Noman Ali, a portfolio manager for U.S. equities at MFC Global Investment Management, said investor enthusiasm in recent weeks is tied to expectations of strong profit reports and the notion that consumers have continued to open their wallets.
“Underlying consumer strength is still pretty strong. There’s really little to worry about in terms of the economy going into recession.”
