NEW YORK (
) -- 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
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 apurchase."
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
; and avoiding more luxury/big ticket (or at least non-necessity) names like
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."
As would be expected amid so much trepidation, the poll found most folks are shying away from non-essential expenditures like trips.
"We believe that the concept of the 'staycation' is reemerging, as 60% of consumers surveyed said that they are not planning to take a vacation in the next six months." the firm said. "In addition, we expect big ticket spending to be constrained in 2H12, as 56% of consumers said that they had not made a purchase of $500 or more in the PAST six months and 53% of consumers said they do not expect to make a purchase of $500 or more in the NEXT six months."
Another ill omen arrived courtesy UBS on Wednesday as the firm said it's starting to see more of its clients join retail investors in selling stock holdings.
"In the last two weeks of June, UBS clients turned net sellers of equities on a global basis," the firm said. "This change ended a 6-week streak of net-buying that was the longest consecutive period in two years. Since the turn in mid-June, net selling has accelerated. It seems that as investors have gained more insight into global economic momentum, corporate earnings prospects, and the latest EU proposals, market enthusiasm has waned."
UBS said the change has been spurred by a shift in strategy by the so-called smart money.
"The biggest swing factor in the last few weeks has been the hedge fund client base, which was the driving force behind the strong buying trend we saw from late April through early June," the firm said. "That has changed and now hedge fund clients have re-joined their long-only peers in net-selling equities."
Add it all together and the odds in favor of another long summer for U.S. stocks are only getting shorter.
Meantime, Thursday's earnings roster includes
( JDAS), and
The economic calendar features weekly initial and continuing jobless claims at 8:30 a.m. ET; export and import prices for June at 8:30 a.m. ET; and the Treasury budget for June at 2:00 p.m. ET. The consensus estimate for initial claims of 375,000, according to
Also worth watching will be data on gross domestic product and industrial production from China.
was the big loser in Wednesday's after-hours action. The stock was dropping in extended trades after the Minneapolis-based grocery store operator fell short of Wall Street's profit expectations for its fiscal first quarter, suspended its dividend and said it plans to review its strategic options.
Shares were last quoted at $3.89, down 26.5%, on volume of around 1.1 million, according to
. SuperValu CEO Craig Herket said the company
would not be considering a bankruptcy filing
as part of the strategic review.
Written by Michael Baron in New York.
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