Given the massive role gasoline plays in American life (in a February 2013 report, the US Energy Information Administration estimated that Americans spend about 4 percent of their pre-tax income on gasoline) the drop in gas prices is naturally expected to have an impact on consumer spending.

Sliding crude oil prices are giving consumers relief at the pump, which is bound to provide a fillip for consumer spending. But whether that is good news for the stock market is another story. Crude oil futures have been demolished over the last four months, falling some 17 percent from their June highs, and settling at a 17-month low on Friday.
And as oil prices have fallen, consumer gasoline prices have dropped to a nationwide average of USD 3.32 a gallon, the lowest since February, according to AAA. The motor club group also notes that in 26 states, gas can be found for cheaper than USD 3.00 per gallon. And AAA predicts that gas prices will continue to fall in October.

This potential help comes as consumer discretionary stocks have disappointed, badly underperforming the market with nearly flat performance on the year. That makes it the second-worst of the S&P’s 10 sectors (with the worst sector being energy, ironically enough).

On the earnings side, too, things look grim. Consumer discretionary is the only sector from which analysts expect to see a year-over-year decline in third-quarter earnings, according to FactSet (however, the 5.6 percent earnings decline anticipated is greatly depressed by an unfavorable comparison for PulteGroup).

coustery : http://www.moneycontrol.com/news/world-news/whatimpactplunging-oil-prices-really-means_1196561.html