What: Luxury goods stocks have taken a hit over fears of a softening US economy hitting demand.

Why it is important: Slowing growth in the US is a growing concern for the sector despite luxury stocks outperforming by a large margin this year.

Shares in Hermès International slumped 5.5%, while LVMH saw a decrease around 4% and Kering dropped around 2%.

While the luxury sector has become a collection of dominant businesses whose growth has held up even as the economy fluctuates, confidence in that view is now decreasing as aspirational US consumers decrease their spending.

The rebound in China has been among the key drivers of strong sales in the sector, however investors are expected to be picky moving forward as the US is expected to suffer an economic slump later this year.

Luxury stocks are still outperforming by a large margin this year, with LVMH seeing a 25% increase and Hermès increasing 34%.LVMH became the first European company to reach a market value of USD 500 billion and also saw its shares hit a record after reporting a surge in sales.

However, early warning signs are starting to emerge as LVMH has seen a slowdown in US growth and Burberry has reported that demand for sneakers and entry-level products is softening among younger Americans.

Luxury Stocks lose USD 30 billion in one day on demand fears