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US Consumer Sentiment Dips in June: Will ETFs Suffer?
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The consistently high inflation levels are weighing on the U.S. consumer sentiment levels. The latest preliminary consumer sentiment readings for early June reflect the same story. The University of Michigan’s preliminary consumer sentiment declined to 50.2 in the initial June survey, hitting the lowest mark recorded by the survey since the mid-70s (per a Yahoo Finance article). The reading compared unfavorably to May's level of 58.4. The metric also lagged the market forecast of the index coming in at 58.1, per Bloomberg data.
The disappointing consumer sentiment reading might hurt 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 declined 12.5% from the previous month to 55.4 in June. The Expectations Index witnessed a 15.2% month-over-month fall in the year-ahead economic outlook to 46.8. One-year inflation expectations remain at 5.4% for the fourth consecutive month (per a Reuters article).
Commenting on the results, Joanne Hsu, director of the University of Michigan's Surveys of Consumers has reportedly mentioned that "Consumer sentiment declined by 14% from May, continuing a downward trend over the last year and reaching its lowest recorded value, comparable to the trough reached in the middle of the 1980 recession," per a Yahoo Finance article.
The world’s largest economy is grappling with consistently high-inflation levels. Per the latest Labor Department report, the Consumer Price Index (CPI) jumped 8.6% year over year in May (the maximum since 1981), surpassing the already high Dow Jones estimate of an 8.3% rise. The metric compared unfavorably with the 8.3% rise in April.
Energy, food and shelter stood out as major contributors to the surge in the index. Notably, energy prices rose 34.6% year over year, while gas prices jumped about 49%, according to a Yahoo Finance article.
The core inflation index, which excludes volatile components, such as food and energy prices, rose 6% year over year, beating expectations of a 5.9% rise. The rising inflation levels once again dashed the hopes of inflation peaking in May.
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 to Keep Track of
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 an AUM of $15.87 billion. XLY tracks the Consumer Discretionary Select Sector Index.
The Consumer Discretionary Select Sector SPDR Fund charges an expense ratio of 0.10%. XLY currently carries a Zacks ETF Rank #1 (Strong Buy), with a Medium-risk outlook. Also, The Consumer Discretionary Select Sector SPDR Fund trades in a three-month average volume of 9.4 million shares (read: Why Fear High Inflation? Play Cyclical ETFs).
Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index.
Vanguard Consumer Discretionary ETF has an AUM of $4.58 billion and charges an expense ratio of 0.10%. VCR carries a Zacks ETF Rank #1, with a Medium-risk outlook. Also, Vanguard Consumer Discretionary ETF trades in a three-month average volume of about 164,000 shares.
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 an AUM of $452.4 million. 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 530,000 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 $1.08 billion in its asset base. FDIS charges 8 basis points as annual fees from investors and carries a Zacks ETF Rank #1, with a Medium-risk outlook. Fidelity MSCI Consumer Discretionary Index ETF trades in a three-month average volume of about 142,000 shares.
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US Consumer Sentiment Dips in June: Will ETFs Suffer?
The consistently high inflation levels are weighing on the U.S. consumer sentiment levels. The latest preliminary consumer sentiment readings for early June reflect the same story. The University of Michigan’s preliminary consumer sentiment declined to 50.2 in the initial June survey, hitting the lowest mark recorded by the survey since the mid-70s (per a Yahoo Finance article). The reading compared unfavorably to May's level of 58.4. The metric also lagged the market forecast of the index coming in at 58.1, per Bloomberg data.
The disappointing consumer sentiment reading might hurt 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 declined 12.5% from the previous month to 55.4 in June. The Expectations Index witnessed a 15.2% month-over-month fall in the year-ahead economic outlook to 46.8. One-year inflation expectations remain at 5.4% for the fourth consecutive month (per a Reuters article).
Commenting on the results, Joanne Hsu, director of the University of Michigan's Surveys of Consumers has reportedly mentioned that "Consumer sentiment declined by 14% from May, continuing a downward trend over the last year and reaching its lowest recorded value, comparable to the trough reached in the middle of the 1980 recession," per a Yahoo Finance article.
The world’s largest economy is grappling with consistently high-inflation levels. Per the latest Labor Department report, the Consumer Price Index (CPI) jumped 8.6% year over year in May (the maximum since 1981), surpassing the already high Dow Jones estimate of an 8.3% rise. The metric compared unfavorably with the 8.3% rise in April.
Energy, food and shelter stood out as major contributors to the surge in the index. Notably, energy prices rose 34.6% year over year, while gas prices jumped about 49%, according to a Yahoo Finance article.
The core inflation index, which excludes volatile components, such as food and energy prices, rose 6% year over year, beating expectations of a 5.9% rise. The rising inflation levels once again dashed the hopes of inflation peaking in May.
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 to Keep Track of
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 an AUM of $15.87 billion. XLY tracks the Consumer Discretionary Select Sector Index.
The Consumer Discretionary Select Sector SPDR Fund charges an expense ratio of 0.10%. XLY currently carries a Zacks ETF Rank #1 (Strong Buy), with a Medium-risk outlook. Also, The Consumer Discretionary Select Sector SPDR Fund trades in a three-month average volume of 9.4 million shares (read: Why Fear High Inflation? Play Cyclical ETFs).
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 an AUM of $4.58 billion and charges an expense ratio of 0.10%. VCR carries a Zacks ETF Rank #1, with a Medium-risk outlook. Also, Vanguard Consumer Discretionary ETF trades in a three-month average volume of about 164,000 shares.
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 an AUM of $452.4 million. 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 530,000 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 $1.08 billion in its asset base. FDIS charges 8 basis points as annual fees from investors and carries a Zacks ETF Rank #1, with a Medium-risk outlook. Fidelity MSCI Consumer Discretionary Index ETF trades in a three-month average volume of about 142,000 shares.