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Consumer Stocks: Can the Rally Last?

by Ben Steverman on May 8, 2009

The stock market's recent rally has had an unlikely leader: consumer discretionary stocks.

The economically sensitive sector has shrugged off gloomy economic conditions as investors look to better times ahead. In the past 13 weeks, the Standard & Poor's 500-stock index consumer discretionary sector is up 23%, more than any other sector. Year-to-date through May 6, the sector had risen 10.5%, putting it in the top three of 2009 performers, along with the materials and information technology sectors.

That's quite a shift in fortune for a sector that relies on consumer purchases, whether for apparel, autos, homes, or other goods that aren't categorized as necessary staples.
Upscale Retail Stocks Up

During the downturn, discount chains such as Wal-Mart (WMT) and Family Dollar Stores (FDO) held their own. But discretionary stocks, especially higher-end retailers, were pummeled. In 2008, for example, Nordstrom (JWN) shares dropped 64%, Macy's...Read More >>



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