The SPDR S&P Retail ETF (XRT) is facing its worst week since March 2023, with a -5.66% decrease week to date. This puts the ETF on track for its lowest weekly performance in over a year. Companies such as Walgreens, Leslie’s, Foot Locker, Ulta, and Burlington are all contributing to the XRT’s downward trend, with losses exceeding -10% for the week. This slump in the retail sector indicates a challenging period for retail investors and companies.
In another aspect of the financial market, investor sentiment is reaching its limit, according to Bespoke Investment Group. Bullish sentiment, as measured by the Investors Intelligence and American Association of Individual Investors, is currently at relatively extreme levels, with the bull-bear spread in the 99th percentile according to historical data since 1997. This high reading suggests potentially weaker returns ahead. While historically stocks see slight declines in the near term following these sentiment levels, longer-term gains are still expected.
Meanwhile, oil prices are surging due to escalating tensions in the Middle East, particularly with Israel closing embassies over threats from Iran. This geopolitical turmoil has pushed oil prices up, with the West Texas Intermediate and Brent contracts showing solid gains. The international situation is contributing to the market fluctuations, impacting various sectors and causing volatility in both stock and commodity markets.
