Consumer Discretionary, Corporate Bond And REIT ETFs To Watch This Week

While the SPDR S&P 500 ETF SPY lost ground last week, the strong rally on Friday managed to reduce the net impact and pave the way for a possible rebound on Monday. So far this year, SPY has gained just 2.98 percent amid a choppy environment that has many investors scratching their heads as to where the market is headed.

Nevertheless, the week ahead features several key economic data points such as factory orders, productivity and monthly employment statistics. Non-farm payrolls in particular is a closely watched metric that will weigh on the Fed’s ultimate interest rate policy plans.

Here are the key ETFs to watch for the week of Monday, May 4:

Consumer Discretionary Select Sector SPDR XLY

Top consumer discretionary stocks such as Comcast Corporation CMCSA, Walt Disney Co DIS, and Priceline Group Inc PCLN are set to report earnings this week. These three stocks represent a significant portion of XLY, which tracks 87 large-cap media and retail names.

XLY has been a leading sector of the market so far in 2015 with a total return of 6.18 percent. Positive quarterly results from these stocks would likely build on those gains and represent a strong consumer gauge as well.

iShares iBoxx $ Investment Grade Corporate Bond ETF LQD

High quality investment grade corporate bonds have come under fire recently as rising interest rates look to derail the momentum in this sector. LQD fell precipitously last week as fixed-income investors reduced their exposure to interest-rate sensitive securities.

This exchange-traded fund tracks a diversified basket of over 1,300 corporate bonds of highly rated companies such as Goldman Sachs Group Inc GS and AT&T Inc. T. LQD has over $22 billion in total assets and currently yields 2.96 percent.

Further volatility in interest rates make this ETF worth watching as an early indicator of bond market sentiment.

iShares Down Jones U.S. Real Estate (ETF) IYR

Real estate investment trusts have also succumbed to the move higher in interest rates by erasing their gains this year. IYR tracks 114 publicly traded REITs in the office, residential, hospital and retail space.

After gaining as much as 8 percent in January, IYR has slowly given back all of those returns and recently fell below the flat line for the year. REIT investors may be spooked by the potential impact of a Fed rate hike and banking gains after a strong showing last year.