Jun 14, 2022 - Economy

What Dollar Tree's stock tells us about America's economic jitters

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

Dollar Tree is in, Target is out.

Why it matters: The diverging direction of a couple of key consumer stocks shows how investors foresee tougher times ahead for American households.

  • That would benefit retailers with rock-bottom prices (like Dollar Tree), which tend to gain business during downturns.

The big picture: While these are just two stocks, we've seen a sudden move away from consumer stocks that rely on discretionary spending this year.

  • The S&P 500's consumer discretionary sector is the worst-performing part of the S&P 500, down more than 33% in 2022 while the overall index shed 21%.
  • The discretionary sector includes a wide swath of companies that rely on people's optional spending — like airlines, cruise companies, casinos, and even homebuilders.
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