A sharp selloff in US consumer-discretionary stocks may have created a buying opportunity, according to SentimenTrader analysis. More than half of the S&P 500 Consumer Discretionary Index components are trading at least 20% below their 252-day highs, a pattern that has historically preceded 14% average rallies in the following year.

Energy price volatility since the Iran conflict has battered the sector, raising production costs and dampening consumer spending on non-essentials. The S&P 500 Consumer Discretionary Index has dropped 10% year-to-date, more than twice the broader market's decline. Companies like Lululemon, Ulta Beauty, and Wynn Resorts have been particularly hard hit.

Market strategists see potential for a rebound if economic headwinds ease. Nationwide's Mark Hackett notes the sector often rebounds first when sentiment improves, acting as a proxy for consumer confidence. First-quarter earnings are expected to grow after a recent decline, and the National Retail Federation projects 4.4% sales growth in 2025 to $5.6 trillion. However, elevated energy prices and interest rates could delay a sustained recovery until the Federal Reserve signals monetary easing.