Consumer Companies Flat as Traders Hedge on Confidence Trends - Consumer Roundup

Features Dow Jones Newswires

Shares of manufacturing and transportation companies ticked down as traders remained leery about the implications of the latest oil rout for the sector.

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South Korean tech giant Samsung Electronics is in late-stage discussions to invest about $300 million to expand its U.S. production facilities at a factory soon to be vacated by Caterpillar. Expanding the U.S. manufacturing sector is a major goal of President Donald Trump.

(-By Rob Curran, rob.curran@dowjones.com)

Shares of retailers and other consumer-services companies were more or less flat as traders hedged their bets on the outlook for consumer confidence and spending.

Analysts at brokerage Credit Suisse said a long period of outperformance from luxury retail stocks could be coming to an end because of stock valuations, stumbles in President Donald Trump's economic plans and a likely slowdown in Chinese luxury spending.

Lead indicators such as house prices, Chinese growth and Swiss watch export data "imply a slowdown in luxury spending," analysts said. "The U.S. accounts for 15% of luxury goods demand, so a loss of policy momentum concerning President Trump's tax reforms (which could boost the after-tax income of the top 1% by nearly 15%) is problematic," said the Credit Suisse analysts.

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Government-owned Qatar Airways said it intends to buy as much as 10% of American Airlines Group, an attempt by the fast-growing Middle East carrier to gain a foothold in the U.S. American Airlines Chief Executive Doug Parker said the he was "not happy" to receive the notice from Qatar, which he found surprising and "puzzling."

Comparisons of consumer confidence data between this year and the peak of other cycles suggests that confidence could be near a peak, said one money manager. "Based on the current data, confidence does appear to be topping," said Brad McMillan, chief investment officer of Commonwealth Financial Network, in a note to clients. "Although there are no signs of a substantial decline yet, levels are certainly no longer increasing." If the pattern from the economic expansion that ended in 2000 holds, consumer confidence could start to fall sharply some time in 2018, Mr. McMillan said.

(-By Rob Curran, rob.curran@dowjones.com)

(END) Dow Jones Newswires

June 22, 2017 16:44 ET (20:44 GMT)