Week of June 3–7
Due to escalating trade tensions and a sluggish economy, the consumer sector is in the limelight right now. The sector was already performing better due to good job numbers this year. The prospects of a Fed rate cut increased last week, which benefited the sector.
When market volatility increases, investors usually turn their interest towards defensive sectors like the healthcare and consumer sectors. The consumer sector has gained attention due to the possibility that the Fed might cut interest rates soon, sluggish economic growth, and ongoing trade tensions.
The market also recovered last week. Most of the sectors in the S&P 500 Index increased. On June 7, President Trump called off the tariffs on Mexico, which also helped the markets. The SPDR S&P 500 ETF (SPY), which tracks the S&P 500, gained 4.5% last week. As of June 10, SPY has gained 15.6% year-to-date.
May wasn’t a productive month for the stock market due to the escalating trade war. May was disastrous for the consumer sector. Most of the consumer companies reported lower earnings. However, the stock market and the consumer sector have started June on a positive note. The consumer sector gained last week.
Consumer sector ETFs
Consumer sector-based ETFs were impressive in the week ending June 7. The Consumer Discretionary Select Sector SPDR ETF (XLY) tracks the performance of the S&P 500 Consumer Discretionary Index. XLY gained 4.3% last week. The Consumer Staples Select Sector SPDR ETF (XLP), which tracks the S&P 500 Consumer Staples Index, gained 5.4% last week. The SPDR S&P Retail ETF (XRT) tracks the S&P Retail Select Industry Index. XRT gained 2.8% last week.
Index performance this year
The consumer discretionary sector has fared better than the consumer staples sector and the S&P 500 year-to-date. The S&P 500 Consumer Discretionary Index has risen ~17.0%. The S&P 500 Consumer Discretionary Index has outperformed the S&P 500 and S&P 500 Consumer Staples Index, which have risen 14.6% and 14.8% this year, respectively.