Consumer spending remains gloomy, Wall Street downgrades profit expectations for non-essential consumer goods sector in the US stock market.

Zhitong App has learned that Wall Street analysts are increasingly skeptical about whether US consumer spending can continue into next year. Despite persistent inflation and rising borrowing costs, American consumers still maintain astonishing resilience.Gina Martin Adams and Michael Casper, stock strategists at Bloomberg Intelligence, stated that over the past 12 weeks, sell-side analysts have lowered profit expectations for the non-essential consumer goods sector of the S&P 500 index for the third quarter of next year. This is mainly driven by declining revenue expectations. Profit growth expectations for the non-essential consumer goods sector are lower than the profit growth expectations for the S&P 500 index before mid-2024."These strategists stated on Thursday: 'Although profit margin forecasts remain strong, revenue estimates are declining as there is widespread doubt about non-essential consumer demand in the coming year.'"The S&P 500 non-essential consumer goods index has surged 40% this year, nearly double the 23% increase in the S&P 500 index. However, this increase has been largely driven by tech giants Tesla (TSLA.US) and Amazon (AMZN.US). Carnival Cruise (CCL.US) and Nike (NKE.US) will provide the latest data on consumer demand when they release their earnings reports next week.On Thursday, the US non-essential consumer goods sector continued its recent upward trend and traded near its highest level since April 2022. This came after the US Department of Commerce unexpectedly reported a rebound in retail sales in November.Strategists at Wells Fargo Bank stated that retail sales data indicates a strong performance during the holiday shopping season. However, they still expect consumer spending to slow down in 2024 due to reduced household savings, deteriorating credit conditions, and signs of a slowdown in the labor market.Michael Pearce, Chief US Economist at Oxford Economics, warned that the November data was released after weak retail sales data in October, which means that actual consumption growth in the fourth quarter is still lower than the previous quarter.Data from Bloomberg Intelligence strategists shows that although sell-side analysts have lowered revenue expectations for all non-essential consumer goods sectors, Hasbro (HAS.US), VF Corporation (VFC.US), and Tesla (TSLA.US) are expected to experience the largest decline in revenue over the next four quarters. Meanwhile, companies such as Lennar Corporation (LEN.US), Wynn Resorts (WYNN.US), and AutoZone (AZO.US) are expected to have the largest increase in annual revenue.The escalating negative sentiment indicates that Wall Street has already factored in a significant downside potential for most stocks in this industry, raising doubts about how much impact individual stocks will suffer even if consumer demand weakens.Casper from Bloomberg Intelligence stated: "Except for Amazon and Tesla, other non-essential consumer goods stocks are discounted." "In such a low valuation situation, there may be a risk of analysts excessively lowering performance expectations."