Last week’s stock market decline saw equities fall more than 10% from April highs, the level generally recognized as a correction. However, even in a broad pullback, some groups continue to fare better than others.
Investors are pushing consumer discretionary stocks higher despite questions about the outlook for consumer spending. The Vanguard Consumer Discretionary ETF (VCR) is up nearly 14% on the latest leg of the rally which began on February 9.
As the rest of the economy struggles with the credit crunch and rising unemployment, McDonalds (MCD) has been on a tear. Cumulative earnings are up 42% over the past four quarters and Q4 appears to be on track with October sales up 8.2%
Outstanding consumer credit declined at an annualized rate of 3.75% in August on a seasonally adjusted basis according to the Federal Reserve Bank of New York. The monthly decline was the first since January 1998 and only the second since the recession of the early 90s.
Despite continuing declines in the auto sector, the DJ Consumer Goods Index has steadily climbed back from its July low. Strength in food & beverage as well as in personal and household goods have lead the sector higher.