The consumer is back. At least that's what prices of consumer
goods and services stocks are indicating this week.
The Consumer Discretionary Select Sector SPDR (NYSE:
) recently broke out to new highs on the back of strong
from Home Depot (NYSE:
). This consumer-oriented fund houses 87 large-cap stocks that
include retail, media, hotel, automobile and luxury goods
Home Depot is one of the top five holdings in XLY, with Walt
Disney Company (NYSE:
) holding the top spot in this market-cap weighted index.
have surged recently on positive financial results and other
indications of consumer behavior.
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These stocks tend to be closely watched for sensitivity to
economic cycles. XLY has more than $6 billion in total assets and
charges an expense ratio of 0.16 percent.
So far this year, this ETF has gained just 2.47 percent
compared to the 7.6 percent gain in the SPDR S&P 500 ETF
Consumer discretionary stocks have largely struggled this year
as investors have rotated into defensive value sectors such as
energy, utilities and consumer staples companies. This has led
many to believe that a
in consumption would ultimately lead to a breakdown in the
The recent surge in XLY back above its intermediate- and
long-term moving averages, in addition to hitting new highs, may
provide an indication that this rally has further to run.
Other ETFs that surged on the Home Depot announcement include
the SPDR Homebuilders ETF (NYSE:
) and the SPDR S&P Retail ETF (NYSE:
). These funds provide narrower industry focuses on home
improvement companies and traditional brick-and-mortar retail
stores. Both have also struggled to stay above the flat line in
2014 amid concern for tepid growth.
The next several weeks will be a critical test as to whether
these ETFs can sustain this recent momentum or if these gains
will be short lived. It goes without saying that during these
unpredictable summer months, nearly anything can happen.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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