Retail Sales May Have Doomed Tech Stocks. Watch This Number Closely

by | Aug 19, 2022 | Market Outlook, Stocks

I pinpointed retail sales as the week’s biggest inflection point for Wall Street in Monday’s look ahead…

And we had lousy retail earnings that were slightly better than expected, which helped drive stocks higher. But earnings season is ending, so it’s important to look for new catalysts that could move the market.

Let’s take a look at what happened…

Retail Sales Are Better Than They Appear… Which is Bad News for Stocks

A 0.1% month-over-month increase was expected in retail sales coming into the week, and we got 0.0%. But there’s a catch… the reason it was flat is due to the fact that energy prices came down in July. So if you take out autos and gas, retail sales were actually quite a bit higher at 0.7%. 

If we look at what’s stressing the market right now, it’s the 10-year yield, which is up again Friday, and that’s going to be a negative stress on growth stocks like ARK Innovation ETF (NYSEArca: ARKK). 

ARKK started the week around $52, we got stronger retail sales numbers excluding gas and autos, which means the Federal Reserve has more ramp to raise interest rates — and that’s not good for growth stocks. 

So look what happened to ARKK, down to under $45 by Friday afternoon, a 14% haircut in just a few days…

a stock chart for ARKK (retail sales
This will keep moving the needle next week, and it’s something we have to pay attention to. 

Another thing I’m watching closely is the 10-year yield. Because higher rates means it costs more to borrow… And if it moves back into the 3.2% range, tech stocks are going to take an absolute nosedive. 

Check out my video up top and let’s discuss another stock I discussed Monday, Target Corp. (NYSE: TGT) and more!

Are there any topics you’d like to see me cover or questions you’d like answered? Send me an email at jeff@joyofthetrade.com! And be sure to stay ahead of the markets by subscribing to our YouTube channel and our Instagram page for all of the latest!

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WRITTEN BY<br>Jeff Zananiri

WRITTEN BY
Jeff Zananiri

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