Over the last week or so we’ve seen a lot of weakness in the two consumer sectors and the retail group more specifically.  This morning’s weaker than expected Retail Sales report added to the pain.

While there have been a lot of high profile misses in retail recently (WMT, M, JWN), it hasn’t shown up very much in the performance of the S&P 500 Consumer Discretionary sector.  Below we provide a one-year price chart of the sector next to a chart of the Consumer Staples sector, which is made up of non-cyclical consumer names.  As you can see, while the Consumer Staples sector is trending slightly downwards and hasn’t gone anywhere over the last year, the Consumer Discretionary sector is trending higher and remains above its 50-day moving average.  In terms of year-to-date performance, while the Consumer Staples sector is down slightly year-to-date, the Consumer Discretionary sector is up 8%+.

The relative strength charts of Consumer Discretionary and Consumer Staples couldn’t look more different.  These charts compare the performance of the sector vs. the S&P 500, so when they’re headed higher, they’re outperforming the broad market, and when they’re headed lower, they’re underperforming the broad market.  While Consumer Staples is now flat versus the S&P 500 over the last year, the Consumer Discretionary sector has significantly outperformed and hasn’t skipped a beat.

So how is the Consumer Discretionary sector up so much this year even though we’ve seen so much weakness in a large number of consumer-related stocks?  Amazon.com (AMZN).

Were it not for Amazon.com, the Consumer Discretionary sector would look just as weak as the Consumer Staples sector.  As shown below, AMZN is up 110% year-to-date.  As the largest stock in the sector, AMZN’s significant gain has masked weakness throughout the rest of retail.

As mentioned earlier, the S&P 500 Consumer Discretionary sector is up 8%+ this year, but that’s on a cap-weighted basis.  If we equal-weight the sector, the average Consumer Discretionary stock is actually down 1.84% year-to-date.  If we remove AMZN, the rest of the Consumer Discretionary stocks are down an average of 3.19% year-to-date.  AMZN is propping up the sector like none other.  The “bricks to click” trend is real, and it’s growing more and more by the day.  Look no further than these 2015 performance numbers as evidence.

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