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Consumer Cos Down After Fed's Powell Warns on Economic View — Consumer Roundup

Shares of retailers and other consumer companies fell after a warning from Federal Reserve Chairman Jerome Powell that the economic outlook remained "highly uncertain."

One strategist said there had recently been a "disconnect" between the rally in economically cyclical stocks and the dire economic outlook.

"I think part of it is psychological, as people get cabin fever, and that starts to wear off as things reopen, they get optimistic," said Rich Steinberg, chief market strategist at wealth-management firm The Colony Group.

"They think it's click your heels three times like in 'The Wizard of Oz' and you get home, but it just doesn't work like that."

Another strategist said investors should await the outcome of economic reopening experiments in Southern U.S. states.

"Several states are serving as unintentional experiments in restarting commercial activity," said Scott Clemons, chief investment strategist at private bank Brown Brothers Harriman, in a note to clients.

"We're watching Georgia, South Carolina, Tennessee and Texas in particular. If these states succeed in reopening their economies without a second surge in Covid-19 diagnoses, hospitalizations and deaths, other states are likely to follow suit and accelerate their own plans." Mr. Clemons said the incubation period of the disease meant that the results of the "gamble" would become clear in early June.

 

Write to Rob Curran at rob.curran@dowjones.com

(END) Dow Jones Newswires

May 13, 2020 17:09 ET (21:09 GMT)

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