US Restaurant Downturn Signals Recession
$DIA, $SPY, $QQQ, $VXX
During much of the recovery from the US financial crisis, restaurant spending has been a retail highlight as other areas, like department stores, have struggled. However, recent surveys point to the start of a serious decline.
“Today, we adopt a bearish outlook for restaurants as we confidently believe that, at a minimum, the simultaneous -150 basis points to -200bpts deceleration of restaurant industry comps across all categories during the second quarter within our most recent Stifel Sales Survey reflects the start of a US Restaurant Recession,” The Stifel analysts team said in a note Wednesday.
This does not just augur ill for restaurants, but could point to trouble across the economy as a whole.
A downturn in dining may well be implying a US recession as soon as early Y 2017, since “restaurants have historically led the market lower during the three to six-month periods prior to the start of the prior three US recessions.”
Analysts will get a better insight into what sales have looked like for a number of restaurants in the coming days and weeks as they report earnings.
Earnings have been gloomy so far, with Starbucks Corp (NASDAQ:SBUX). and Chipotle Mexican Grill Inc. (NYSE:CMG) both missing analyst estimates last week, and Del Frisco’s reporting a 0.7% decline in comparable restaurant sales. McDonald’s Corp. (NYSE:MCD) also reported sales growth that missed estimates.
Wednesday, the US major stock market indexes finished at: DJIA -1.58 at 18472.17, NAS Comp +29.76 at 5139.81, S&P 500 -2.60 at 2166.58
Volume: Trade was above average with about 960-M/shares exchanged on the NYSE
- Russell 2000 +7.3% YTD
- DJIA +6.0% YTD
- S&P 500 +6.0% YTD
- NAS Comp +2.6% YTD
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