It’s consumer discretionary stocks leading the U.S. market today. (Consumer discretionary spending is spending that consumers don’t have to do, but that they want to do when they have the dough.)

The Standard & Poor’s 500 Stock Index is up 2.06% as of noon New York time today. The S&P consumer discretionary index, on the other hand, as tracked by the Consumer Discretionary Select Sector SPDR ETF (XLY) is up 2.45%.

Not surprising since we’ve got a prefect storm of good news from the consumer sector today:

1. Walt Disney (DIS) beat Wall Street earnings estimates by 6 cents a share when it reported after the market close last night. Revenue came in at $10.43 billion for the quarter, above the $10.35 billion projected by analysts. Revenue at the parks and resorts unit grew by 11%. The shares are up 6.8$ today.
2. The University of Michigan Consumer Sentiment index rose to 64.2 in November from 60.9 in October. Economists had expected an increase to 61.3. This is the strongest reading for the index since June.
3. Based on early reads from companies such as UPS (UPS), retail sales during the holiday shopping season that begins on the Friday after Thanksgiving look like they’re headed toward the high end of projections for 2% to 6% year to year growth.

Stocks doing especially well today include (besides Walt Disney) Amazon.com (AMZN), Coach (COH), Deckers Outdoor (DECK), Ralph Lauren (RL) and VF (VF).

Global stock markets wait on tomorrow’s economic numbers from China and United States for direction

Fasten your seat belts; it could be a bumpy ride tomorrow.

Two economic numbers, one from China overnight (from a U.S. perspective) and one from the United States before the New York market opens, have the power to move stocks in the current very volatile environment.

The Chinese number is the official version of the preliminary manufacturing purchasing managers index (PMI). The preliminary version, released by HSBC and Markit Economics on September 22, showed the manufacturing PMI falling to 49.4 in September from a reading of 49.9 in August. Any index level below 50 indicates that the sector is contracting.

The Shanghai Composite Index fell 2.8% on September 22 and has been dropping since. As of September 29, the index was down 5.9% from September 22.

The fear is that the drop in the manufacturing PMI signals that China’s economy is slowing more than expected and that projections for 8.2% to 8.5% GDP growth in 2012 are still too high and will have to come down, bringing company earnings and stock prices with them.

But the September 22 preliminary reading on the PMI only includes data from about 85% to 90% of China’s companies in the fuller survey that will be released tonight. That extra 10% to 15% might not seem like a big deal but the missing surveys tend to come from China’s biggest state-owned companies. And not only are these companies major exporters but also since they have ready access to financing from the country’s state-owned banks, they haven’t been hit as hard as the smaller companies in the survey by the lending slowdown engineered by the People’s Bank. Anecdotes and data from China say that smaller companies are starved of capital right now.

The market hope is that the full number from the PMI will hang above 50. Read more

This week has started off as last week ended—with investors willing to see the economic glass as half full.

Last Friday U.S. stocks rallied, after initially sinking, after Federal Reserve chairman Ben Bernanke said the U.S. economy is strong enough that the Fed doesn’t need to launch a third round of quantitative easing now. Investors apparently decided it was good news if the Fed thought it didn’t have to intervene to prop up growth.

The Dow Jones Industrial Average climbed 4.3% for the week.

Today U.S. stocks were higher again on an 0.8% increase in personal spending in July. The advance in July was the strongest gain n spending since February and a huge swing from the 0.1% drop in June. Economists surveyed by Briefing.com had expected a 0.5% increase in consumer spending.

In its current glass-is-half-full mode the financial markets were willing to look past the problems represented by a 0.3% increase in personal income in July. Read more

Stocks fall on data showing that the U.S. consumer is cutting back on spending

This morning’s data from the Commerce Department on personal income and spending is a cold shower to any optimist thinking that consumer spending might step up to save economic growth in the United States. With the U.S. economy growing at an annualized rate of less than 1% in the first half of the year and with Washington set to remove stimulus from the economy (the end of the Fed’s QE2 program of Treasury buying, for example, or the debt ceiling’s small but still significant cuts to the 2012 budget), financial markets didn’t need this morning’s bad news from the consumer sector. Personal income rose by 0.1% in June—below the 0.2% increase in May and the slowest rate of growth since November—and personal spending fell by 0.2% after a 0.1% increase in May.

For spending to drop while income is still edging up is a bad sign. Read more

Nasty surprise in this morning’s revision to first quarter U.S. GDP numbers.

Not on the top line really. Real (that means after subtracting inflation) GDP growth for the quarter stayed at 1.8% in these revisions, exactly the same as in the last estimate. (All GDP numbers are estimates until the final reading comes in about a year after the quarter is over. Of course, nobody cares by that point.)

Economists had been expecting that the revision would take growth up to 2.0% for the quarter.

As economists had expected, increases in exports, nonresidential fixed investment, and inventories pushed the GDP growth figure upwards in this revision. And as expected an increase in imports took back some of those gains.

What economists hadn’t been expecting, however, was a downward revision to personal consumption expenditures. Read more