Electronics, Clothes and Retail are all part of the Consumer Discretionary Sector.  These are products that are considered non essential by consumers.  In fact while these products are considered desirable, the consumers will only buy them if they have sufficient money to do so. 

However with high inflation and rising interest rates, the Consumer Discretionary Sector has plummeted 35% year to date and recorded the maximum decline among all the S&P500 sectors.  The S&P500 Index itself has only dropped 20% year to date.

I believe that all 3 components of the Consumer Discretionary Sector will miss earnings expectations.  

Under Electronics, companies like Apple and Nvidia will be affected by the strong US dollar which makes their exports more expensive globally.  There is also slowing down in global economy and supply chain disruption that would impact their 3Q22 earnings performance.

Under Clothes and Retail, companies like Nike, Target and Walmart are also affected by excess inventory.  This is due to the companies trying to keep pace with Covid 19 pandemic demands while coping with supply chain bottlenecks.   So for now these companies have to slash prices to get rid of excess inventory.

However some companies are faring better in each sector.  Walmart has only dropped 5% year to date compared to Target's 31%. Nike fared worse and has plummeted 46% year todate.  Apple has dropped 19% compared to Nvidia 's 58%.

It is therefore important to choose quality companies within the Consumer Discretionary sector that will weather the volatility better than others.   These will stand the test of time to thrive and grow in the long term. 

For now the Consumer Discretionary Sector is the weakest link in the S&P500 Index.  Electronics, Clothes and Retail will miss Q3 2022 earnings expectations. However  strong, profitable companies within this sector will fare much better than others and may surprise us with a better than expected earnings. 

@Tiger_chat@CaptainTiger@MillionaireTiger@TigerStars