Wall Street has enjoyed a "Trump bump," but it wouldn't take much for skittish investors to run for the exits. Post-election America remains bitterly divided, with political turmoil increasing both at home and abroad.
Retail stocks are particularly hot right now, but they're overpriced and probably poised for a pullback. Despite the spate of recent good economic news, you should keep a wary eye on key data in the week ahead. Future prospects are mixed.
To be sure, the strengthening economy, improving wages, falling joblessness, rising home prices, low interest rates and inexpensive energy are adding up to high expectations for the holiday shopping season.
The National Retail Federation expects holiday retail sales this year to grow 3.6%, to $655.8 billion, exceeding last year's year-over-year growth of 3.2%. Early indications also are positive for retail sales during the recent Black Friday, with stores reporting a 13.6% year-over-year surge.
Problem is, traders over the past month have pushed up the prices of major retail stocks, making most of them far too pricey. The retail sector looks frothy and set for a fall.
Over the past month, the share prices of the nation's largest retailers have posted these steep jumps: Best Buy (BBY) (+18.55%); Kohl's (KSS) (+25.28%); Macy's (M) (+22.78%); and Target (TGT) (+14.61%). Wal-Mart (WMT) only gained 2.36%, and e-commerce juggernaut Amazon (AMZN) lost 5.13% during this period, but year-to-date their shares have posted hefty gains of 16.20% and 15.46%, respectively.