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US Consumer Sentiment Improves in April: Will ETFs Gain?
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The latest encouraging preliminary consumer sentiment readings for early April can be largely attributed to the improving job market. The University of Michigan’s preliminary consumer sentiment index rose to 65.7 in early April from a final reading of 59.4 last month, improving 10.6% over the prior month. The metric surpassed the market forecast of the index coming in at 59.
The encouraging consumer sentiment reading might support the consumer discretionary sector, which attracts a major portion of consumer spending amid the rising inflation levels. Certain ETFs that can see the gains are The Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) , First Trust Consumer Discretionary AlphaDEX Fund (FXD - Free Report) and Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) .
The measure of current economic conditions rose to 68.1 in April from 67.2 last month. In early April, a gauge of consumer expectations jumped to 64.1 from a reading of 54.3 in March. The Expectations Index witnessed a 29.4% jump in the year-ahead economic outlook along with a surge of 17.2% in personal financial expectations. One-year inflation expectations remain at 5.4% in early April (per a Reuters article). The survey's five-to-10-year inflation outlook stayed at 3% in April.
The improvement in consumer sentiment levels can largely be due to expectations for a slowdown in gas price hikes as President Joe Biden announced the release of strategic oil reserves and eased some seasonal EPA rules, per the verified sources.
The strong labor market and recovering U.S. economy have boosted the positive market sentiments as consumer confidence also improved in March after declining for the first two months of 2022. The Conference Board's measure of consumer confidence index stands at 107.2 in March 2022 versus 105.7 in February. Moreover, March’s reading nominally surpassed the consensus estimate of 107, per a Bloomberg survey of economists. However, the metric continues to be below the pre-pandemic level of 132.6 achieved in February 2020.
Meanwhile, the Russia-Ukraine crisis, inflation at a 40-year high and the Fed’s hiked outlook for the interest rate remain concerns. As the Russia-Ukraine tension continues, rising commodity prices and fears of further disruptions in global supply-chain distributions might stoke higher inflation. Also, as the Federal Reserve took an aggressive approach to increase the rates, market participants are worried about the U.S. economy slipping into a stagflation due to high-interest rates and steep inflation.
ETFs That Might Gain
Here we discuss in detail the four most popular funds that target the broader consumer discretionary sector (see all Consumer Discretionary ETFs):
The Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
The Consumer Discretionary Select Sector SPDR Fund is the largest and the most popular product in the consumer discretionary space, with AUM of $19.23 billion. XLY tracks the Consumer Discretionary Select Sector Index.
The Consumer Discretionary Select Sector SPDR Fund charges an expense ratio of 0.10%. XLY carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook. Also, The Consumer Discretionary Select Sector SPDR Fund trades in a three-month average volume of 12.2 million shares (read: Diagnosis of Economy on Health Day: 6 ETFs That Look Fit).
Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index.
Vanguard Consumer Discretionary ETF has AUM of $6.16 billion and charges an expense ratio of 0.10%. VCR carries a Zacks ETF Rank #2, with a Medium-risk outlook. Also, Vanguard Consumer Discretionary ETF trades in a three-month average volume of about 171,000 shares (read: 5 ETFs to Ride on Tesla's Record Q1 Deliveries).
First Trust Consumer Discretionary AlphaDEX Fund (FXD - Free Report)
First Trust Consumer Discretionary AlphaDEX Fund tracks the StrataQuant Consumer Discretionary Index, employing the AlphaDEX stock-selection methodology to select stocks from the Russell 1000 Index.
First Trust Consumer Discretionary AlphaDEX Fund has AUM of $1.47 billion. FXD charges 0.61% of annual fees and has a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook. Also, First Trust Consumer Discretionary AlphaDEX Fund trades in a three-month average volume of about 308,000 shares.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index.
Fidelity MSCI Consumer Discretionary Index ETF amassed $1.43 billion in its asset base. FDIS charges 8 basis points as annual fees from investors and carries a Zacks ETF Rank #2, with a Medium-risk outlook. Fidelity MSCI Consumer Discretionary Index ETF trades in a three-month average volume of about 162,000 shares.
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US Consumer Sentiment Improves in April: Will ETFs Gain?
The latest encouraging preliminary consumer sentiment readings for early April can be largely attributed to the improving job market. The University of Michigan’s preliminary consumer sentiment index rose to 65.7 in early April from a final reading of 59.4 last month, improving 10.6% over the prior month. The metric surpassed the market forecast of the index coming in at 59.
The encouraging consumer sentiment reading might support the consumer discretionary sector, which attracts a major portion of consumer spending amid the rising inflation levels. Certain ETFs that can see the gains are The Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) , First Trust Consumer Discretionary AlphaDEX Fund (FXD - Free Report) and Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) .
The measure of current economic conditions rose to 68.1 in April from 67.2 last month. In early April, a gauge of consumer expectations jumped to 64.1 from a reading of 54.3 in March. The Expectations Index witnessed a 29.4% jump in the year-ahead economic outlook along with a surge of 17.2% in personal financial expectations. One-year inflation expectations remain at 5.4% in early April (per a Reuters article). The survey's five-to-10-year inflation outlook stayed at 3% in April.
The improvement in consumer sentiment levels can largely be due to expectations for a slowdown in gas price hikes as President Joe Biden announced the release of strategic oil reserves and eased some seasonal EPA rules, per the verified sources.
The strong labor market and recovering U.S. economy have boosted the positive market sentiments as consumer confidence also improved in March after declining for the first two months of 2022. The Conference Board's measure of consumer confidence index stands at 107.2 in March 2022 versus 105.7 in February. Moreover, March’s reading nominally surpassed the consensus estimate of 107, per a Bloomberg survey of economists. However, the metric continues to be below the pre-pandemic level of 132.6 achieved in February 2020.
Meanwhile, the Russia-Ukraine crisis, inflation at a 40-year high and the Fed’s hiked outlook for the interest rate remain concerns. As the Russia-Ukraine tension continues, rising commodity prices and fears of further disruptions in global supply-chain distributions might stoke higher inflation. Also, as the Federal Reserve took an aggressive approach to increase the rates, market participants are worried about the U.S. economy slipping into a stagflation due to high-interest rates and steep inflation.
ETFs That Might Gain
Here we discuss in detail the four most popular funds that target the broader consumer discretionary sector (see all Consumer Discretionary ETFs):
The Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
The Consumer Discretionary Select Sector SPDR Fund is the largest and the most popular product in the consumer discretionary space, with AUM of $19.23 billion. XLY tracks the Consumer Discretionary Select Sector Index.
The Consumer Discretionary Select Sector SPDR Fund charges an expense ratio of 0.10%. XLY carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook. Also, The Consumer Discretionary Select Sector SPDR Fund trades in a three-month average volume of 12.2 million shares (read: Diagnosis of Economy on Health Day: 6 ETFs That Look Fit).
Vanguard Consumer Discretionary ETF (VCR - Free Report)
Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index.
Vanguard Consumer Discretionary ETF has AUM of $6.16 billion and charges an expense ratio of 0.10%. VCR carries a Zacks ETF Rank #2, with a Medium-risk outlook. Also, Vanguard Consumer Discretionary ETF trades in a three-month average volume of about 171,000 shares (read: 5 ETFs to Ride on Tesla's Record Q1 Deliveries).
First Trust Consumer Discretionary AlphaDEX Fund (FXD - Free Report)
First Trust Consumer Discretionary AlphaDEX Fund tracks the StrataQuant Consumer Discretionary Index, employing the AlphaDEX stock-selection methodology to select stocks from the Russell 1000 Index.
First Trust Consumer Discretionary AlphaDEX Fund has AUM of $1.47 billion. FXD charges 0.61% of annual fees and has a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook. Also, First Trust Consumer Discretionary AlphaDEX Fund trades in a three-month average volume of about 308,000 shares.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index.
Fidelity MSCI Consumer Discretionary Index ETF amassed $1.43 billion in its asset base. FDIS charges 8 basis points as annual fees from investors and carries a Zacks ETF Rank #2, with a Medium-risk outlook. Fidelity MSCI Consumer Discretionary Index ETF trades in a three-month average volume of about 162,000 shares.