| As the most important shopping period of the year approaches, some United States investors are betting shares of beaten-down consumer stocks will benefit if inflation keeps falling and retail sales stay strong.
Target shares plunged last week after the company warned of “dramatic changes” in consumer behaviour. Black Friday on November 25, traditionally one of the year’s biggest shopping days, may give investors greater insight into the extent that consumers are opening their wallets. “The consumer has been a pillar of strength this year, but as rates keep rising and the labour market slows, consumers will have no choice but to pull back on spending,” Morgan Stanley economists wrote in a note on Friday. The bank’s analysts are underweight the consumer discretionary sector.“Recession fears are so priced in to this group,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “If we have a mild recession ... they will do very well from here on out.