What Dollar Tree and Target stocks say about the economy

Data: fact set; Diagram: Axios Visuals

Dollar Tree is in, Target is out.

Why it matters: The divergent direction of some key consumer stocks shows how investors anticipate tougher times for American households.

• That would benefit rock-bottom retailers (like Dollar Tree) who tend to do business in downturns.

The big picture: While these are just two stocks, this year we’ve seen a sudden departure from consumer stocks that rely on discretionary spending.

• The consumer discretionary sector of the S&P 500 is the worst-performing part of the S&P 500, falling more than 33% in 2022 while the overall index lost 21%.
• The discretionary sector includes a variety of businesses that rely on people’s optional spending — such as airlines, cruise lines, casinos, and even home builders.