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The retail sector has been hit hard by a sell-off in recent weeks amid warnings from major companies that rising inflation has hit profits, and despite a rebound on Wednesday, experts predict challenges ahead as consumer spending forecasts. becomes difficult to do.

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Retail and consumer stocks rose thanks to reports that Kohl’s is preparing to receive competitive takeover offers from multiple bidders. according to this Reuters; Meanwhile, investors are seeing a glimmer of hope in Nordstrom’s strong first-quarter revenue and news that it raised its full-year sales outlook.

Both positive headlines helped “buy out for the first time in weeks,” says Adam Crisafuli, founder of Vital Knowledge, which has spurred the business around Dick’s Sporting Goods. Points to activity – whose shares fell roughly 10% before turning positive and rising 10% higher.

The SPDR S&P Retail ETF, which tracks the sector, rose 6% on Wednesday but has remained down nearly 20% so far this month, missing many big gains from major companies.

Large retailers such as Target and Walmart reported weak earnings last week and warned of inflationary pressures to affect profits, prompting not only a sharp sell-off in retail stocks, but fears of a recession.

Wall Street analysts have noted a shift in consumer spending — from goods to services — that impacted results, especially as companies dealing with supply chain issues last year stopped overstocking and now used large inventories. facing.

“Companies are cutting spending and hiring, while consumers are reigniting spending (and retailers are sitting on too much inventory that will need to be flushed out),” says Crisafuli.