We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The annual inflation rate in the United States eased for two months in a row to 8.3% in August of 2022, the lowest in four months, from 8.5% in July but above market forecasts of 8.1%. Meanwhile, core CPI, which eliminates volatile energy and food prices, increased 6.3% on a year, the most since March, and up markedly from 5.9% hit in both June and July.
Core CPI rose 0.3% over the prior month. Much of the continued rise in core inflation originated from the cost of shelter, which increased 0.7% sequentially, the maximum since January 1991. Shelter costs makes up a third of CPI.
The energy index rose 23.8%, below 32.9% in July. Still, inflation data came in higher than forecast. Consumer prices were up 0.1% sequentially, following a flat reading in July and compared to forecasts of a 0.1% decline.
Against this backdrop, we suggest a few sector ETFs that can be worth investing at the time of rising inflation. Below we highlight those.
Real Estate
Weighted shelter makes up 32.77% of CPI, of which 7.8% is rent and 23.68% is private housing, per data from MacroMicro. Shelter costs rose 0.7% in August from 0.5% in July. Rising home prices also boosted the demand for real estate. Zacks Rank #2 (Buy) Vanguard Real Estate ETF (VNQ - Free Report) should thus win.
Medical Care Services
The medical care index rose 0.8% sequentially in August after an uptick of 0.4% in July. iShares U.S. Healthcare Providers ETF (IHF - Free Report) has a Zacks Rank #2. The underlying Dow Jones U.S. Select HealthCare Providers Index of the fund measures the performance of health care providers’ sub-sector of the U.S. equity market. It includes health maintenance organizations, hospitals, clinics, dentists, opticians, nursing homes plus rehabilitation & retirement centers.
Auto
The price inflation of new cars has been palpable. The index for new vehicles increased 0.8% in August after rising 0.6% the previous month. First Trust S-Network Future Vehicles & Technology ETF (CARZ - Free Report) can thus be played on the uptick in car price inflation.
The Zacks Rank #3 (Hold) First Trust SNetwork Future Vehicles & Technology ETF follows the S-Network Electric & Future Vehicle Ecosystem Index, which constituents are chosen by selecting the eligible Pure-Play companies in descending order of float-adjusted market capitalization until 100 constituents have been selected.
Utilities
The index for utility gas service increased 3.5% in August after a decline of 3.6% in July. Electricity prices too added 1.5% in August after a 1.6% gain in July.
Utilities Select Sector SPDR ETF (XLU - Free Report) has a Zacks Rank #3. The underlying index seeks to provide an effective representation of the Utilities sector of the S&P 500 Index.
Transportation Services
Prices for transportation services increased 0.5% in August after a decline of 0.5% in July. SPDR S&P Transportation ETF (XTN - Free Report) has a Zacks Rank #2. The SPDR S&P Transportation ETF, before expenses, seeks to closely match the returns and characteristics of the S&P Transportation Select Industry Index.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5 Sector ETFs to Win from August Inflation Data
The annual inflation rate in the United States eased for two months in a row to 8.3% in August of 2022, the lowest in four months, from 8.5% in July but above market forecasts of 8.1%. Meanwhile, core CPI, which eliminates volatile energy and food prices, increased 6.3% on a year, the most since March, and up markedly from 5.9% hit in both June and July.
Core CPI rose 0.3% over the prior month. Much of the continued rise in core inflation originated from the cost of shelter, which increased 0.7% sequentially, the maximum since January 1991. Shelter costs makes up a third of CPI.
The energy index rose 23.8%, below 32.9% in July. Still, inflation data came in higher than forecast. Consumer prices were up 0.1% sequentially, following a flat reading in July and compared to forecasts of a 0.1% decline.
Against this backdrop, we suggest a few sector ETFs that can be worth investing at the time of rising inflation. Below we highlight those.
Real Estate
Weighted shelter makes up 32.77% of CPI, of which 7.8% is rent and 23.68% is private housing, per data from MacroMicro. Shelter costs rose 0.7% in August from 0.5% in July. Rising home prices also boosted the demand for real estate. Zacks Rank #2 (Buy) Vanguard Real Estate ETF (VNQ - Free Report) should thus win.
Medical Care Services
The medical care index rose 0.8% sequentially in August after an uptick of 0.4% in July. iShares U.S. Healthcare Providers ETF (IHF - Free Report) has a Zacks Rank #2. The underlying Dow Jones U.S. Select HealthCare Providers Index of the fund measures the performance of health care providers’ sub-sector of the U.S. equity market. It includes health maintenance organizations, hospitals, clinics, dentists, opticians, nursing homes plus rehabilitation & retirement centers.
Auto
The price inflation of new cars has been palpable. The index for new vehicles increased 0.8% in August after rising 0.6% the previous month. First Trust S-Network Future Vehicles & Technology ETF (CARZ - Free Report) can thus be played on the uptick in car price inflation.
The Zacks Rank #3 (Hold) First Trust SNetwork Future Vehicles & Technology ETF follows the S-Network Electric & Future Vehicle Ecosystem Index, which constituents are chosen by selecting the eligible Pure-Play companies in descending order of float-adjusted market capitalization until 100 constituents have been selected.
Utilities
The index for utility gas service increased 3.5% in August after a decline of 3.6% in July. Electricity prices too added 1.5% in August after a 1.6% gain in July.
Utilities Select Sector SPDR ETF (XLU - Free Report) has a Zacks Rank #3. The underlying index seeks to provide an effective representation of the Utilities sector of the S&P 500 Index.
Transportation Services
Prices for transportation services increased 0.5% in August after a decline of 0.5% in July. SPDR S&P Transportation ETF (XTN - Free Report) has a Zacks Rank #2. The SPDR S&P Transportation ETF, before expenses, seeks to closely match the returns and characteristics of the S&P Transportation Select Industry Index.