By David Randall and Lewis Krauskopf
NEW YORK (Reuters) - Elevated U.S. interest rates are pressuring the U.S. retail sector, where shares of many companies have been dented by months of tight monetary policy while a select few have soared.
The S&P 500 Consumer Discretionary Distribution & Retail index is up nearly 14% this year, roughly keeping pace with the S&P 500’s year-to-date gain. Much of the sector’s strength, however, has been concentrated in a small group of stocks, including heavyweight Amazon.com, which is up nearly 21% this year.
Meanwhile, shares of companies focused on lower-income consumers have struggled, in-part because buyers in that segment have been more affected by elevated interest rates, analysts said. Among the biggest laggards are shares of Dollar Tree, which are down nearly 27% year-to-date and Dollar General, which have fallen nearly 9%.
The retail sector is one of several areas of the economy - in addition to real estate and consumer staples - that have been pressured by elevated rates. The Federal Reserve earlier this week reiterated that it needs to see more evidence of cooling inflation before lowering borrowing costs.