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4 Sector ETFs & Stocks to Win Despite Weak July Retail Sales

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U.S. retail trade declined 1.1% sequentially in July 2021, following a revised 0.7% gain in June and compared with the market consensus of a 0.3% decline, due to a fall in auto purchases and a resurgence in COVID-19 cases that hurt consumer demand.

Consumer spending makes up about 70% of U.S. economic activity. Thus, any massive jump in it will likely brighten the economic growth picture. Below we highlight a few areas and the related ETFs that benefited the most.

Miscellaneous Store Retailers

Sales grew 3.5% sequentially in July and 22.8% year over year. If job data remains stable and rates remain low, consumers may continue to splurge on activities. However, volatility should remain in place on COVID fear.

Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) thus looks to be a great pick. The underlying Consumer Discretionary Select Sector Index of the fund seeks to provide an effective representation of the consumer discretionary sector of the S&P 500 Index.

Coming to stocks, RH (RH - Free Report) , with a Zacks Rank #2 (Buy), is a leading luxury retailer in the home furnishing space.

Food services & drinking places

Sales in food services and drinking places saw a sales increase of 1.7% in July. Sales were up 38.4% year over year. A few restaurant stocks have exposure to Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report) , so the fund stands to benefit.

As far as stocks are concerned, investors can bet on Zacks Rank #2 Jack In The Box Inc. (JACK - Free Report) .

Health & personal care stores

Spending at health and personal care stores was up 0.1% sequentially and 9.2% year over year.

Global X Health & Wellness Thematic ETF (BFIT - Free Report) can be played to tap this segment. The underlying Indxx Global Health & Wellness Thematic Index tracks the performance of companies listed in developed markets that provide products and services aimed at promoting physical wellness through active and healthy lifestyles, including but not limited to fitness equipment and technology, athletic apparel, nutritional supplements, and organic/ natural food offerings. It charges 50 bps in fees.

Zacks Rank #3 (Hold) Procter & Gamble Company (PG - Free Report) looks to be a great bet. Procter & Gamble is a branded consumer products company which markets its products in more than 180 countries primarily through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, distributors, baby stores, specialty beauty stores, e-commerce, high frequency stores and pharmacies.

Electronics & Appliance Stores

Sales of this category advanced slight 0.3% sequentially. Year over year, sales were up 23.6%. Consumers’ interest in buying electronics products should keep demand for semiconductors higher.

VanEck Vectors Semiconductor ETF (SMH - Free Report) appears to be a good pick. The underlying MVIS US Listed Semiconductor 25 Index tracks the overall performance of companies involved in semiconductor production and equipment. The Zacks Rank #3 fund charges 35 bps in fees.

Micron Technology Inc. (MU - Free Report) is one of the leading worldwide providers of semiconductor memory solutions. The stock has a Zacks Rank #3.