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A Positive Week for the Consumer Sector

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What happened in the consumer sector May 7–11?

With 91% of companies already reporting their earnings for the first quarter, last week was positive for the overall sectors in the S&P 500. The S&P 500 Index (SPY) rose 2.1%, driven by growth in all sectors except the utility sector, which fell 1.6%.

The stocks for consumer staples and discretionary companies benefited last with the ongoing earnings season. Consumer staples reported a slight gain of 0.18% last week. Coty (COTY), Monster Beverage (MNST), and Sysco (SYY) dragged down the consumer staples sector when their stocks fell after their earnings results.

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The consumer discretionary sector had a slight gain of 0.48%. Most of the stocks in both sectors that reported earnings last week declined. News Corp (NWSA) and Booking Holdings (BKNG) fell 7.4% and 5.6%, respectively, after their earnings results. Retail giant Walmart (WMT) stock also fell last week after its ongoing Flipkart acquisition deal talks. Walmart is also expected to release its earnings this week. CVS Health and Walgreens benefited last week after President Trump announced a proposal to reduce drug prices.

According to the May 11 FactSet report, the blended earnings growth rate for the S&P 500 stands at 24.9% for the first quarter. It marks the highest earnings growth since the third quarter of 2010.

Despite the fall in most stocks after earnings, Consumer sector–based ETF performances were positive last week. The SPDR S&P Retail ETF (XRT) rose 1.7%, the Consumer Discretionary Select Sector SPDR ETF (XLY) rose 0.5%, and the Consumer Staples Select Sector SPDR ETF (XLP) rose 0.32%.

For 2018, the S&P 500 Consumer Discretionary Index (6.3%) has outperformed the S&P 500 Index (2.2%) and the S&P 500 Consumer Staples Index (-13.6%) on a year-to-date basis.

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