Major ETFs advanced slightly Tuesday following news that
retail sales rose more than expected in July and for the first
time in four months, suggesting that consumer spending could be
on the mend.
U.S. retail sales rose 0.8% -- the most since February --
after a 0.7% drop in June, the U.S. Commerce Department reported.
Economists projected a 0.2% gain.
Market Vectors Retail ETF (
RTH
) jumped 0.56% to an all-time high of 43.63 thanks to a 4% surge
in top holdingHome Depot (
HD
). The home-improvement giant topped second-quarter earnings
expectations and raised guidance for the rest of the year on
optimism about the housing market recovery.
RTH is trading 2% over a 42.81 buy point in a cup base. It has
a strong IBD Relative Strength and Accumulation/Distribution
Ratings combo of 81 and C. It's outpacing 81% of the issues on
the market and institutional buying and selling is about
even.
RTH is heavily weighted in retail giantsWal-Mart Stores (
WMT
), Amazon.com (
AMZN
) andCVS Caremark (
CVS
).
RTH, with a 10% stake in Wal-Mart, has been remarkably
resilient in spite of ongoing economic uncertainty, says Gary
Gordon, president of Pacific Park Financial in Aliso Viejo,
Calif.
"Wal-Mart has been nearly bullet-proof in both recessionary
and expansionary environments," Gordon wrote in
his blog
Monday.
"What makes RTH particularly special is its hybrid make-up,
combining consumer staples standouts with consumer discretionary
leaders," Gordon added. "Wal-Mart,Costco (COST) andSysco (SYS)
may actually thrive in tough times, while shopping-happy
Americans with money to spare may 'indulge' atWhole Foods
(WFM),Bed, Bath & Beyond (BBBY) or even Amazon."
SPDR S&P Retail (XRT) increased 0.42% to 60.21. It's
forming a cup-with-handle base with a potential 60.96 buy point.
It sports 73 RS and C- Accumulation/Distribution Ratings.
Business inventories increased by 0.1% in June as overall
sales during the month fell by 1.1% in the face of a cautious
consumer environment, the Commerce Department reported.
Meanwhile, the producer price index increased by 0.3%,
seasonally adjusted, in July, in line with expectations, the
Labor Department reported. The core index picked up 0.4% vs. 0.2%
as forecast. Core prices rose 2.5% from the year-ago month.
Market Overview
In afternoon trade, the SPDR S&P 500 (SPY) ticked up 0.15%
to just a hair below its 52-week high from April.
SPDR Dow Jones Industrial Average (DIA) edged up 0.14%.
PowerShares QQQ (QQQ), a basket of the 100 largest
nonfinancial stocks on the Nasdaq, added 0.22%.
"Volatility is likely to remain high and equities may be
poised for some sort of correction given their multiweek climb,
but we expect stocks to continue to grind higher in the months
ahead," Bob Doll, senior advisor at BlackRock, wrote in client
note. "Thanks largely to hopes over additional policy action,
stocks managed to survive a relatively weak second-quarter
earnings season.
"There is some question as to whether or not the recent
earnings softness will prevent stocks from making additional
gains, but we have confidence in the longevity of the business
cycle."
IShares MSCI EAFE Index (EFA), tracking developed foreign
markets, lifted 0.31%.
IShares MSCI Emerging Markets Index (EEM) rose 0.36%.
Follow Trang Ho on Twitter
@TrangHoETFs
.