Market Preview: No More Mass Quantities

NEW YORK (TheStreet) -- The stock market has been in swoon mode of late with the negative catalysts reaching take-your-pick density.

The positive side of ledger is pretty thin, narrowing down to valuations are still pretty reasonable and bond yields are so low that investors will eventually be forced to put money to work in equities, right?

Meantime, the laundry list of worries includes Europe's still nowhere near resolved debt crisis, the looming U.S. fiscal cliff, a potential hard landing for China, floundering job creation and mediocre earnings expectations for second-quarter reporting season. Heck, it's gotten so bad that even Apple (AAPL) getting initiated with a buy rating and a $740 price target by UBS can't produce a pop for the stock.

Well, don't look now but a dismal back-to-school selling season could soon be added to that list.

Citigroup disclosed the results of its consumer survey for the second half on Wednesday, saying a whopping 81% of respondents plan to spend the same or less than last year over the remainder of 2012. As a result, the firm thinks retailers will be facing challenging selling conditions as summer wanes.

"We believe that spending will be constrained during the Back-to-School season, with consumers shopping for the best price/value," Citigroup said. "Our survey found that price will be the primary motivation for consumers, with 77% citing price as a key factor when making a purchase."

The firm said it believes these conditions will benefit its "empty pockets" thesis, which argues in favor of owning companies that benefit from belt tightening such as Autozone (AZO), Dollar General (DG) and Wal-Mart Stores (WMT); and avoiding more luxury/big ticket (or at least non-necessity) names like Best Buy (BBY), Macy's (M) and Nordstrom (JWN).

The results show very little conviction among consumers that things are going to get better anytime soon.

"In our survey, 43% of respondents said that that they expect the U.S. economy to stay the same over the next six months (27% expect deterioration and 30% expect improvement)," Citigroup said, adding later: "Over the next six months, 30% of survey respondents said that they would not be able to afford some of the luxuries they want and 13% said they would be unable to afford even the basic necessities. For families earning under $25,000/year, 28% said that they would be unable to afford the basic necessities over the next six months."

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