Consumer Cos Down After ISM Data -- Consumer Roundup

Shares of retailers and other consumer-services companies ticked down as traders backed off economically sensitive areas in light of soft economic data. The Institute for Supply Management said its index of nonmanufacturing activity -- which tracks a range of industries including retailing, health care, and finance -- fell to 56.9 in May from 57.5 in April. Home builders may struggle to sell the American dream to young Americans, according to one brokerage. "We find that the Millennial generation can afford to buy a home - in terms of making the monthly payments," said analysts at brokerage Bank of America Merrill Lynch Global Research, in a note to clients. "We believe the delay in homeownership is due to tighter credit standard and lifestyle changes, including delayed marriage and children. We do not expect these factors to change in the medium term, keeping the homeownership rate low for young adults." The consumer-discretionary sector is the leading exemplar of a broader trend on the stock market this year, according to analysts at brokerage Morgan Stanley -- a lack of breadth. "Despite discretionary being one of the best performing sectors this year, less than half of those stocks have outperformed the market and those that have outperformed, have outperformed by less, on average, than the laggards in the group have underperformed," said the Morgan Stanley analysts, in a note to clients. "The disconnect between the distribution of returns in Discretionary and the sector's aggregate performance is a sign of narrow breadth..." On a fundamental basis, the trend reflects the many losers in the shift from bricks-and-mortar shopping and the scarcity of traditional retail corporations who have adapted to this behavior.

-Rob Curran, rob.curran@dowjones.com

(END) Dow Jones Newswires

June 05, 2017 16:23 ET (20:23 GMT)