This website collects cookies to deliver better user experience. Cookie Policy
Accept
Sign In
The Wall Street Publication
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Reading: Fewer Goods Are Less Good for the Stock Market
Share
The Wall Street PublicationThe Wall Street Publication
Font ResizerAa
Search
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Have an existing account? Sign In
Follow US
© 2024 The Wall Street Publication. All Rights Reserved.
The Wall Street Publication > Blog > Markets > Fewer Goods Are Less Good for the Stock Market
Markets

Fewer Goods Are Less Good for the Stock Market

Editorial Board Published January 31, 2022
Share
Fewer Goods Are Less Good for the Stock Market
SHARE

Big public companies in the U.S. aren’t particularly representative of American businesses at large. For much of the pandemic, that has been a blessing for the stock market. In the months ahead, it could be a curse.

A quick look through the companies in the S&P 500 shows that a lot of them are in the business of making and selling stuff. Out of the 500, 216 are classified as manufacturers or retailers. But Commerce Department data show that manufacturers and retailers account for only about one-sixth of private U.S. firms, and Labor Department data show they account for a little more than one-fifth of private-sector jobs.

Further, manufacturers and retailers accounted for about half of S&P 500 sales last year, according to FactSet estimates. But over the first three quarters of last year, Commerce Department figures show that the two sectors accounted for under one-quarter of seasonally adjusted private-sector sales, as measured by gross output.

The stock market’s outsize focus on goods has made it a major beneficiary of the economic shifts brought as a result of the pandemic. Unable or unwilling to partake in activities such as going out to restaurants or taking trips as much as they did before Covid-19 struck, Americans bought more stuff instead. This was compounded by the fact that inflation has been concentrated in the goods sector. Thursday’s report on gross domestic product showed that in the fourth quarter final sales of goods—that is, what the ultimate purchasers of stuff, whether they were consumers, businesses or governments—was 17.5% higher than two years earlier. Final sales of services were up 5.8% over that period.

As a bonus, the weakness in the services sector led the Federal Reserve to keep monetary policy very easy for a long time—a development that benefited the makers and sellers of goods and their share prices.

Moreover, many of the services companies that are in the S&P 500 were better insulated from the effects of the pandemic—or even benefited from them—than services businesses at large. Netflix, which has benefited from all the time people have spent streaming movies and shows, is classified as a services company. So is United Parcel Service, which has been delivering lots of goods to people’s doorsteps. On the other hand, the food services and accommodation sector, which took some of the hardest hits from the pandemic, is underrepresented in the stock market relative to the economy.

So what might happen in the year ahead, if the pandemic loosens its grip and a greater share of spending shifts to the services sector as a result? Historically, when services spending seriously outpaces spending on goods, the stock market has often struggled as happened in the early 2000s, for example, when the S&P 500 declined for three years in a row.

It isn’t clear the past offers much of a guide, however, since periods of weakness in goods spending relative to services spending have usually been associated with weakness in the economy at large. On the other hand, the fact that the Fed looks as if it will soon be raising rates—something it typically doesn’t do during periods of economic weakness—is an additional reason for stock investors to be concerned.

A shift in spending away from goods might not be a good thing for the stock market.

Write to Justin Lahart at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the February 1, 2022, print edition as ‘Fewer Goods Don’t Help Stock Prices.’

TAGGED:MarketsPAIDWall Street Publication
Share This Article
Twitter Email Copy Link Print
Previous Article The Instagram Story Gets a Few More Wrinkles The Instagram Story Gets a Few More Wrinkles
Next Article Ackman Made Billions on Pandemic Shutdown, Bounceback Ackman Made Billions on Pandemic Shutdown, Bounceback

Editor's Pick

Fremont police ask for assist discovering ‘at risk’ lacking lady

Fremont police ask for assist discovering ‘at risk’ lacking lady

FREMONT — Police listed here are asking for the general public’s assist finding a woman who disappeared on Friday afternoon…

By Editorial Board 1 Min Read
How Hulk Hogan strong-armed his wrestling persona right into a money-making machine
How Hulk Hogan strong-armed his wrestling persona right into a money-making machine

FOX Enterprise’ Jackie DeAngelis experiences that WWE legend Hulk Hogan has died…

5 Min Read
Trudeau radically overhauled the Senate — will Carney maintain his reforms?
Trudeau radically overhauled the Senate — will Carney maintain his reforms?

Former prime minister Justin Trudeau upended 150 years of Canadian parliamentary custom…

11 Min Read

Oponion

‘Narsimha Rao Learnt 17 Languages’: Andhra CM Naidu Backs Hindi Adoption | Politics Information

‘Narsimha Rao Learnt 17 Languages’: Andhra CM Naidu Backs Hindi Adoption | Politics Information

Final Up to date:July 15, 2025, 20:01 IST Naidu hailed…

July 15, 2025

Former WeWork CEO Says He Has Regrets

In what was promoted as his…

November 9, 2021

Michelle Obama makes it clear she needs nothing to do with Donald Trump

Eight years in the past, Michelle…

January 14, 2025

Biden administration expands no-go zones where ICE can’t arrest illegal immigrants

The Department of Homeland Security has…

October 27, 2021

Berkeley: Pedestrian killed after being struck by automobile

A driver struck and killed a…

January 27, 2025

You Might Also Like

Microsoft joins unique T market cap membership after AI surge, becoming a member of just one different firm
Markets

Microsoft joins unique $4T market cap membership after AI surge, becoming a member of just one different firm

Angelo Zino, a CFRA Analysis senior fairness analyst, discusses the efficiency of Microsoft, Meta and the general tech sector within…

4 Min Read
Moderna plans to slash 10% of workforce as COVID shot gross sales gradual
Markets

Moderna plans to slash 10% of workforce as COVID shot gross sales gradual

Rep. Russell Fry, R-S.C., discusses the Home probe into Pfizer’s launch of COVID vaccine outcomes and extra on ‘Varney &…

3 Min Read
Figma goes public, and the CEO was a fellow at Peter Thiel’s basis
Markets

Figma goes public, and the CEO was a fellow at Peter Thiel’s basis

‘Making Money’ host Charles Payne discusses whether or not the inventory market is a coiled spring able to explode or…

5 Min Read
Zuckerberg needs to offer everybody their very own private superintelligence via Meta’s new imaginative and prescient
Markets

Zuckerberg needs to offer everybody their very own private superintelligence via Meta’s new imaginative and prescient

Meta CEO Mark Zuckerberg on Wednesday introduced the tech large will give attention to growing a private superintelligence for everybody, which…

4 Min Read
The Wall Street Publication

About Us

The Wall Street Publication, a distinguished part of the Enspirers News Group, stands as a beacon of excellence in journalism. Committed to delivering unfiltered global news, we pride ourselves on our trusted coverage of Politics, Business, Technology, and more.

Company

  • About Us
  • Newsroom Policies & Standards
  • Diversity & Inclusion
  • Careers
  • Media & Community Relations
  • WP Creative Group
  • Accessibility Statement

Contact

  • Contact Us
  • Contact Customer Care
  • Advertise
  • Licensing & Syndication
  • Request a Correction
  • Contact the Newsroom
  • Send a News Tip
  • Report a Vulnerability

Term of Use

  • Digital Products Terms of Sale
  • Terms of Service
  • Privacy Policy
  • Cookie Settings
  • Submissions & Discussion Policy
  • RSS Terms of Service
  • Ad Choices

© 2024 The Wall Street Publication. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?