3 Consumer ETFs That Twinkle Invitingly Before Black Friday
The final two months of the year have investors heavily focusing on retail and consumer stocks for clues to a Santa Claus rally.
The Black Friday holiday shopping event and strong demand for retail spending combine to generate billions of dollars in economic activity.
Consumer Discretionary SPDR
The Consumer Discretionary SPDR (ETF) (NYSE: XLY) is an excellent barometer of investor expectations for this sector and has taken off since the October low. This ETF tracks 86 large-cap companies engaged in automotive, luxury goods, travel and traditional retail business.
XLY just recently broke out to a new all-time high and has gained more than 6 percent in the last month. This momentum is a good sign that investors expect activity from these discretionary stocks to be strong in the fourth quarter.
Last year, XLY was one of the sector leaders in November and December.
Sub-Industry SPDR S&P Retail
As a sub-industry of this sector, the SPDR S&P Retail ETF (NYSE: XRT) focuses on 100 companies engaged in apparel sales, electronics, specialty stores and other retail business.
This equal-weighted index has struggled in 2014 to maintain positive headway, but has flourished in recent weeks as company earnings have come in better than expected.
In fact, XRT has gained 9 percent over the last month and continues to show signs of relative strength versus the broader market.
Competitor Consumer Staples Select Sector SPDR
Not to be outdone, the stalwart Consumer Staples Select Sect. SPDR (ETF) (NYSE: XLP) has had a very consistent year that shows even defensive stocks are still in high demand. This ETF tracks 42 large-cap stocks of food, beverage and household products that are known to have stable track records.
So far this year, XLP has gained more than 12 percent and continues to trade near all-time highs.
With consumer sentiment indexes trending higher and energy prices falling lower, the backdrop is set for these consumer ETFs to have a strong finish to 2014. Expect this sector to be a heavy focus for the remainder of the year and set the tone for the start of 2015 as well.
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