{"id":7603,"date":"2024-07-02T08:56:26","date_gmt":"2024-07-02T08:56:26","guid":{"rendered":"https:\/\/wallstwarroom.com\/?p=7603"},"modified":"2024-07-02T09:25:41","modified_gmt":"2024-07-02T09:25:41","slug":"restaurant-stocks-sizzle-out-are-consumers-running-on-empty","status":"publish","type":"post","link":"https:\/\/wallstwarroom.com\/h\/market-news\/restaurant-stocks-sizzle-out-are-consumers-running-on-empty\/","title":{"rendered":"Restaurant Stocks Sizzle Out: Are Consumers Running on Empty?"},"content":{"rendered":"<p data-sourcepos=\"3:1-3:80\">Restaurant stocks are serving up a heaping helping of worry for investors in 2024. While the broader market enjoys a tech-fueled rally, the Russell 3000 Restaurant Index is burning, dropping nearly 2% on July 1st and sinking below its May low. This freefall extends a downtrend that began in March, according to Jonathan Krinsky, chief market technician at BTIG. Since then, the Restaurant Index has shed 6%, a stark contrast to the S&amp;P 500&#8217;s 6% gain over the same period.<\/p>\n<p data-sourcepos=\"5:1-5:367\">Krinsky&#8217;s analysis paints a concerning picture. The weakness in restaurants isn&#8217;t an isolated incident; it joins a growing list of ailing sectors like homebuilders, industrials, and materials. This broad consumer-related decline makes it difficult to ignore the potential for a larger market issue, particularly in the late-cycle stage we currently find ourselves in.<\/p>\n<p data-sourcepos=\"7:1-7:120\">&#8220;These groups are no longer opportunities waiting to catch up,&#8221; warns Krinsky. &#8220;Instead, they&#8217;re sending ominous signals about the health of the market.&#8221;<\/p>\n<p data-sourcepos=\"9:1-9:300\">This warning carries extra weight considering the Federal Reserve&#8217;s dovish stance. The last rate hike occurred nearly a year ago, and long-dated Treasury yields peaked eight months back. Despite this seemingly favorable environment, restaurant stocks \u2013 with a few exceptions \u2013 continue their descent.<\/p>\n<p data-sourcepos=\"11:1-11:307\">The year-long relative underperformance of restaurants compared to the market isn&#8217;t a new development. However, Krinsky emphasizes that the recent absolute price breakdown holds greater significance. This freefall, he argues, suggests &#8220;clearly some issues with this group, and likely the consumer at large.&#8221;<\/p>\n<p data-sourcepos=\"13:1-13:18\"><strong>Key Takeaways:<\/strong><\/p>\n<ul data-sourcepos=\"15:1-18:8\">\n<li data-sourcepos=\"15:1-15:117\">Restaurant stocks are experiencing a significant decline, falling nearly 2% on July 1st and trading below May lows.<\/li>\n<li data-sourcepos=\"16:1-16:106\">This weakness extends a downtrend that began in March, significantly underperforming the broader market.<\/li>\n<li data-sourcepos=\"17:1-17:101\">The restaurant sector&#8217;s struggles are part of a larger trend impacting consumer-related industries.<\/li>\n<li data-sourcepos=\"18:1-18:8\">BTIG&#8217;s Jonathan Krinsky views this broad consumer weakness as a potential late-cycle warning sign.<\/li>\n<li data-sourcepos=\"19:1-20:0\">The recent breakdown in absolute prices, despite a dovish Fed, suggests deeper problems within the restaurant industry and potentially the consumer base.<\/li>\n<\/ul>\n<p data-sourcepos=\"21:1-21:15\"><strong>Conclusion:<\/strong><\/p>\n<p data-sourcepos=\"23:1-23:604\">The sizzling summer for restaurant stocks is quickly turning into a scorching sell-off. This sector&#8217;s woes, coupled with weakness in other consumer-driven areas, raise concerns about the health of the overall market, especially considering the Federal Reserve&#8217;s accommodative stance. While relative underperformance has been simmering for some time, the recent absolute price breakdown suggests a more concerning issue at play. Investors should closely monitor the restaurant industry and broader consumer spending trends in the coming months to gauge the severity of this potential late-cycle slowdown.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Restaurant stocks are serving up a heaping helping of worry for investors in 2024. While the broader market enjoys a tech-fueled rally, the Russell 3000 Restaurant Index is burning, dropping nearly 2% on July 1st and sinking below its May low. This freefall extends a downtrend that began in March, according to Jonathan Krinsky, chief&#8230;<\/p>\n","protected":false},"author":14,"featured_media":7606,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","footnotes":""},"categories":[681],"tags":[],"class_list":["post-7603","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/posts\/7603","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/comments?post=7603"}],"version-history":[{"count":1,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/posts\/7603\/revisions"}],"predecessor-version":[{"id":7605,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/posts\/7603\/revisions\/7605"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/media\/7606"}],"wp:attachment":[{"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/media?parent=7603"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/categories?post=7603"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wallstwarroom.com\/h\/wp-json\/wp\/v2\/tags?post=7603"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}