Investors have almost been conditioned over the last several months that what’s good for energy stocks is bad for consumer stocks, and vice versa. When oil spikes two bucks, we can expect stocks like XOM and OIH to rally, and names such as BBY and WMT to fall.
It is with that in mind that we were somewhat surprised to see the following trend develop. The charts below show the changes in Q3 and Q4 y/y EPS growth forecasts for the energy and consumer discretionary sectors. The long blue line depicts the change in Q3 forecasts while the shorter red line shows the trend for Q4.
Note how for both sectors EPS growth forecasts for the fourth quarter have fallen sharply. In fact, over the last two months, the two sectors have seen sharper estimate cuts than any of the other eight S&P 500 sectors.