- The left-behind retailers are leading gains in their sector as the market enjoys what looks like a back-to-normal rally.
- Money is going into equities and out of bonds and the dollar.
- With techs muted for a second day in a row, more cyclical stocks have stepped up. Along with commodities, that means companies that benefit from an emergence from lockdown measures.
- There's no big catalyst for the broader market sentiment, but more of a collection of encouraging signs: hints of compromise in stimulus talks, Disney jumping on streaming performance: July ISM Services topping 58, oil inventories indicating traction in demand.
- The stocks leading the charge in the Consumer Discretionary sector (XLY, +0.8%) are the volatile retailers that have been eclipsed by online retail in the recovery and rely greatly on progress getting the economy back to normal.
- PVH (PVH, +5.1%), Nordstrom (JWN, +5%) and Kohl's (KSS, +3.9%) are popping, along with Under Armour (UAA, +5.5%) on post-earnings momentum.
- PVH, Nordstrom and Kohl's have been active during lockdown measures, moving up and down sharply but never closing the gap between the S&P and the SPDR Retail Sector ETF (XRT, +1.6%), a fund with lots of online retail exposure, but not too distorted by a top 10 Amazon weighting.
- The chart above shows that in the last month the divergence is increasing slightly.
- The group that the beaten-down retail stocks moves more closely in concert with is the airlines. The U.S. Global Jets ETF (JETS, +1.3%) is also climbing today. The cruise lines are sitting this one out, with cruises suspended until at least November.
