Tech might dominate the "top story" sections on Wall Street every day, but it was consumer cyclicals fixing to come out on top Tuesday. As the trading day drew to a close, discretionary names led among S&P 500 sectors, up over 1.5%.
Better-than-expected earnings from Home Depot (+2.1%) played a small role, but a positive readout from the Conference Board's Consumer Confidence Index arguably was the real money maker today. Today, the barometer hit a multi-month high, bolstering industries within the sector. (That might contrast with the POV of the more pessimistic University of Michigan barometer, but good news is good news for cyclicals.)
Specialty retailers like Williams-Sonoma (+3%) and Ulta (+3%), automakers like Ford (+4.5%) and GM (+2.7%), and travel firms like Booking Holdings (+4.9%), Expedia (+4.8%), and Royal Caribbean (+4.7%) all outstripped cyclical giants like Tesla (+2.2%) and Amazon (+2%). They also one-upped the index at large, which rose about two-thirds of a percentage point.
The strength put cyclicals closer to even footing since 2026 began, but it's by no means out of the woods yet. Data from FactSet says consumer discretionary stocks are just one of the two sectors in the index expected to book a year-over-year decline in earnings. 5 of the 9 industries within the sector are facing declines.
That probably explains the anemic performance over the last year, up just 7% over the last year. Still, investors might be holding out for a recovery despite worries about AI-related disruption, the "K-shaped economy", and the fragile labor market. It has the highest forward 12-month P/E per FactSet, a sign that investors might be holding out for a recovery.
