Breaking News
Get 40% Off 0
👀 Reveal Warren Buffett's stock picks that are beating the S&P 500 by +174.3% Get 40% Off

From Amazon to McDonald's, strong earnings show U.S. consumer resilience

Published Oct 30, 2023 01:20PM ET Updated Oct 30, 2023 01:26PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: The logo of Amazon is seen, November 15, 2022. REUTERS/Pascal Rossignol/File Photo 2/2
 
MCD
-0.54%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AMZN
+2.08%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US500
+0.52%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
HLT
+0.18%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
RCL
+1.03%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CMG
+0.74%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Ananya Mariam Rajesh and Aishwarya Venugopal

(Reuters) - In a strong quarter for earnings, the big consumer stocks have shone even brighter, thanks to results from McDonald's (NYSE:MCD), Chipotle Mexican Grill (NYSE:CMG) and others that rank among the biggest surprises of the reporting cycle so far.

Roughly half of the S&P 500 companies have reported results thus far, with more than 77% exceeding results. But of that group, consumer discretionary companies have been the biggest surprise, on average exceeding earnings-per-share estimates by 19%, according to LSEG I/B/E/S data.

Consumer-facing companies have benefited from maintaining higher selling prices and a steady drop-off in raw material costs that have helped boost profit margins.

Discretionary stocks have performed strongly in 2023, proving their resilience at a time when the expectations of a U.S. economic slowdown run high. A 4.9% rise in U.S. gross domestic product in the third quarter further highlights the health of the consumer.

Including Monday's gains, the S&P 500 consumer discretionary index is up nearly 19% this year, far outperforming the broader S&P 500, which is up nearly 8%.

"The results suggest that investors continue to see the sector as a ballast in uncertain times, which we believe is supported by generally sound fundamentals underlying the health of the U.S. consumer," said Jason Benowitz, CI Roosevelt senior portfolio manager.

McDonald's benefited from falling wholesale costs, as its per-share earnings came in at an adjusted $3.19, compared with consensus estimates for $3 a share. The company said falling costs of commodities like vegetables and proteins helped margins.

On the whole, 251 S&P 500 companies have reported results, with 77.7% coming in above analyst expectations, compared with an average of 67% in a typical quarter, according to LSEG data.

Among the other consumer discretionary names that have surpassed expectations are Amazon (NASDAQ:AMZN), Hilton Worldwide Holdings (NYSE:HLT) and Royal Caribbean (NYSE:RCL).

"(What) we're noticing about people making higher wages and as wages go up, they're spending almost all of that increase," said Brian Mulberry, client portfolio manager at Zacks Investment Management. "That would reflect for us a pretty high level of confidence from the consumer."

While most companies flagged the resilience of consumer demand, some analysts also said expectations were low heading into the third quarter as the side effects of still-high inflation lingered.

"I don't think consumer spending drove these beats. I think it was more pricing and a resilient consumer, ones that were able to take this rate at a time when discretionary income is under pressure," Wedbush analyst Gerald Pascarelli said.

From Amazon to McDonald's, strong earnings show U.S. consumer resilience
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
Peter ONeill
Peter ONeill Oct 30, 2023 2:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Consumer resilience - or $33.7 Trillion in national debt which is rising by $1.7 Trillion a year??? Add on top over $1 Trillion in Consumer Credit card debt (US consumer paying via debt for lifestyles) and over $8 Trillion of a Fed Balance sheet....sooner or later the house or cards will come crashing down. Its not if but when it happens..
First Last
First Last Oct 30, 2023 2:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
"sooner or late" ... "when it happens" --  Not a very trade-able nor invest-able thesis.
Peter ONeill
Peter ONeill Oct 30, 2023 2:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
First Last  Are you a moron?? If someone knew when the whole US economy was going to collapse - no one would invest at all. The fact is EVERY economist agrees the USA current path is unsustainable in the medium / long term. Yet no political party is willing to do anything about it as would be so unpopular - no tax raises / more spending / more partying.
First Last
First Last Oct 30, 2023 2:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Peter ONeill   But you didn't give the timing, not even a ballpark figure.  Considering how long the US has a sizable national debt, "the house or cards" may very well not crash for a decade or century.  How long can you short the market while it trends up?  Will you sit on cash waiting while the market continue doubling every few years?  Maybe everything will end in a nuclear holocaust and the US will be ahead by going out in debt.
Peter ONeill
Peter ONeill Oct 30, 2023 2:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
First Last  Yes and AGAIN my point is that the USA is on a completely unsustainable path which will only lead to disaster - guessing what the black swan catalyst / timing which topples the house of cards is a trillion dollar answer (plus no one is even trying to reverse course as would be unpopular). The US has used debt on top of more debt to avoid any form of recession since 2000 while spending and giving tax cuts when times are good. The USA is only able to do this as the dollar is the reserve currency of the world. But with interest on US debt alone now = $800 billion a year, if we hit a global recession similar to that of 2008 which lasts for 2 or more years the US could be in for a lot of trouble. US Debt is now projected to hit $52 Trillion by 2033 - if it breaks here you could well see 20 'lost' years similar to Japan (plus the similarities between Japan in 1991 and the current USA position are shockingly similar - booming economy, massive debt, interest rates to cool inflation etc )
First Last
First Last Oct 30, 2023 2:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Peter ONeill   I got your point.  My point is that your point, true or not, is not fleshed out enough for trading/investing purpose.  I was providing helpful warning for those who might decide to go/stay permabear on your op.  That should be the primary purpose of https://investing.com
Elvis Durant
Elvis Durant Oct 30, 2023 1:44PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
On Lower Guidance even my bankrupt company would make the market look good
Casador Del Oso
Casador Del Oso Oct 30, 2023 1:40PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Resilient economy equals 50bps rate hike.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email