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Main Street is lagging Wall Street: Morning Brief

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Wednesday, February 24, 2021

Consumer confidence remains measured while Wall Street booms.

For the last few weeks we’ve chronicled the increasingly positive economic outlook for the U.S. economy and the investor enthusiasm around this idea.

But U.S. consumers are still lagging behind this buoyant outlook from the investor class.

The Conference Board’s reading on consumer confidence in February published Tuesday showed the index registered a reading of 91.3 this month, a level better than January’s 88.9 and better than the reading of 90 forecasted by economists.

But this level of consumer confidence is still dramatically lower than what prevailed pre-pandemic. And in recent months, consumers’ outlook on the economy has been flat, even as the outlook implied by financial markets has improved dramatically.

Consumer confidence fell off a cliff as the pandemic took hold and has remained at depressed levels relative to pre-COVID readings for the last several months. (Source: Oxford Economics)

Consumer confidence fell off a cliff as the pandemic took hold and has remained at depressed levels relative to pre-COVID readings for the last several months. (Source: Oxford Economics)

“The survey doesn’t tell us why people think the current position has improved,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, “but we can guess that the sharp decline in the Covid numbers, coupled with the stimulus payments made at the start of the year, are helping.”

And encouragingly, this report showed that consumers’ vacation plans are starting to come into focus as case counts moderate and wider distribution of a COVID-19 vaccine continues.

“While the Expectations Index fell marginally in February, consumers remain cautiously optimistic, on the whole, about the outlook for the coming months,” said Lynn Franco, senior director of economic indicators at The Conference Board. “Notably, vacation intentions — particularly, plans to travel outside the U.S. and via air — saw an uptick this month, and are poised to improve further as vaccination efforts expand.”

Nancy Vanden Houten, lead U.S. economist at Oxford Economics, notes that this month’s survey indicated that 33.8% of households were planning a vacation, up from 33.4% in December. Last year, however, this measure stood at 54.9%.

The market action we’ve seen in travel stocks of late indicates that investors are betting on continued improvements in this type of data. The Conference Board asks consumers about their vacation plans on a bi-monthly basis. Presumably this data will improve again in April.

The Conference Board also notes in its report that two key events — the easing of dining restrictions in New York City and the snowstorms in Texas — were not captured in its survey period, which ended Feb. 11. Considering one of these events is a negative and another a positive, however, it doesn’t seem likely a material change in consumer outlooks would’ve resulted.

And so while a further deterioration in consumer attitudes does not appear to be in the cards, it remains to be seen when consumers en masse start to gain confidence in the economic boom investors seem to be anticipating.

Said differently: Main Street is still waiting to get as excited about the rest of this year as Wall Street already is.

By Myles Udland, a reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

What to know today

Economy

  • 7:00 a.m. ET: MBA Mortgage Applications, week ended February 19 (-5.1% during prior week)

  • 10:00 a.m. ET: New home sales, January (856,000 expected, 842,000 in December)

Earnings

Pre-market

  • 6:00 a.m. ET: Six Flags Entertainment (SIX) is expected to report an adjusted loss of $1.00 per share on revenue of $86.59 million

  • 6:00 a.m. ET: Lowe’s (LOW) is expected to report adjusted earnings of $1.21 per share on revenue of $19.41 billion

  • 8:00 a.m. ET: Overstock.com (OSTK) is expected to report adjusted earnings of 21 cents per share on revenue of $670.00 million

  • 9:30 a.m. ET: TJX Companies (TJX) is expected to report adjusted earnings of 67 cents per share on revenue of $11.60 billion

Post-market

  • 4:00 p.m. ET: Booking Holdings (BKNG) is expected to report an adjusted loss of $4.04 per share on revenue of $1.20 billion

  • 4:05 p.m. ET: Teladoc (TDOC) is expected to report an adjusted loss of 25 cents per share on revenue of $378.6 million

  • 4:20 p.m. ET: Nvidia (NVDA) is expected to report adjusted earnings of $2.81 per share on revenue of $4.82 billion

  • 4:30 p.m. ET: L Brands (LB) is expected to report adjusted earnings of $2.85 per share on revenue of $4.86 billion

  • 4:40 p.m. ET: Apache (APA) is expected to report an adjusted loss of 12 cents per share on revenue of $1.06 billion

  • 6:00 p.m. ET: Viacom (VIAC) is expected to report adjusted earnings of $1.03 per share on revenue of $6.86 billion

Top News

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Bitcoin recovers to $50,000 [Yahoo Finance UK]

Powell: Rising bond yields signal recovery but Fed’s ‘job not done’ [Yahoo Finance]

Yahoo Finance Highlights

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Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.

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