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Sector ETFs Likely to Gain on April Inflation Data
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The Consumer Price Index (CPI) data released by the U.S. Bureau of Labor Statistics provides investors with valuable insights into the current economic trends. The annual inflation rate in the United States dropped to 4.9% in April 2023, the lowest since April 2021, and below market forecasts of 5%, but following a 0.1% increase in March.
This article breaks down the implications of the CPI data on various sectors and highlights the ETFs that stand to benefit from these trends.
Food Sector: Steady Demand and Rising Prices
The food index remained unchanged in April, with a 7.1% year -over-year increase for food at home and an 8.6% increase for food away from home. Overall increase was 7.7%. Sequentially, food-at-home was off 0.2% while food away from home inflation was still up 0.4%.
Investors may consider ETFs focused on the restaurant industry, such as AdvisorShares Restaurant ETFEATZ to capitalize on the trend. The Consumer Staples Select Sector SPDR Fund (XLP - Free Report) or the VanEck Vectors Agribusiness ETF (MOO - Free Report) can also be played due to still-profitable trend.
Energy Sector: Mixed Performance Amid Volatility
The energy index rose 0.6% sequnetially in April after a 3.5% decrease in March. The gasoline index increased 3.0%, while other energy components such as natural gas, electricity, and fuel oil declined 4.5%. The Energy Select Sector SPDR Fund (XLE - Free Report) and the iShares Global Clean Energy ETF (ICLN - Free Report) are two ETFs that could benefit from the still-solid the energy market.
Shelter and Real Estate: Rising Costs and Strong Demand
The shelter index, a key contributor to the overall CPI increase, rose 0.4% sequentially in April. Year over year, the index was up 8.1%. Investors can consider ETFs like the iShares U.S. Real Estate ETF (IYR - Free Report) or the Vanguard Real Estate Index Fund (VNQ - Free Report) to gain exposure to this sector, which is experiencing strong demand and rising prices.
Auto Sector: Opportunities in Used Cars and Insurance
The used cars and trucks index increased by 4.4% sequentially, while motor vehicle insurance rose by 1.4%. Price for new vehicles gained 5.4% year over year but dropped 0.2% sequentially.
ETFs such as the iShares U.S. Consumer Services ETF (IYC - Free Report) , First Trust S-Network Future Vehicles & Technology ETF (CARZ - Free Report) and the SPDR S&P Insurance ETF (KIE - Free Report) could provide investors with exposure to these segments.
Healthcare: A Mixed Bag of Performance
The medical care index remained unchanged in April, with hospital services and prescription drugs experiencing moderate increases. The Health Care Select Sector SPDR Fund (XLV - Free Report) and the iShares U.S. Healthcare ETF (IYH - Free Report) offer investment opportunities in this sector.
Transportation: Still-Hot But Showing Signs of Cooling
Transportation services inflation was up 11% year over year but declined 0.2% sequentially. SPDR S&P Transportation ETF (XTN - Free Report) represents the transportation segment of the S&P Total Market Index.
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Sector ETFs Likely to Gain on April Inflation Data
The Consumer Price Index (CPI) data released by the U.S. Bureau of Labor Statistics provides investors with valuable insights into the current economic trends. The annual inflation rate in the United States dropped to 4.9% in April 2023, the lowest since April 2021, and below market forecasts of 5%, but following a 0.1% increase in March.
This article breaks down the implications of the CPI data on various sectors and highlights the ETFs that stand to benefit from these trends.
Food Sector: Steady Demand and Rising Prices
The food index remained unchanged in April, with a 7.1% year -over-year increase for food at home and an 8.6% increase for food away from home. Overall increase was 7.7%. Sequentially, food-at-home was off 0.2% while food away from home inflation was still up 0.4%.
Investors may consider ETFs focused on the restaurant industry, such as AdvisorShares Restaurant ETF EATZ to capitalize on the trend. The Consumer Staples Select Sector SPDR Fund (XLP - Free Report) or the VanEck Vectors Agribusiness ETF (MOO - Free Report) can also be played due to still-profitable trend.
Energy Sector: Mixed Performance Amid Volatility
The energy index rose 0.6% sequnetially in April after a 3.5% decrease in March. The gasoline index increased 3.0%, while other energy components such as natural gas, electricity, and fuel oil declined 4.5%. The Energy Select Sector SPDR Fund (XLE - Free Report) and the iShares Global Clean Energy ETF (ICLN - Free Report) are two ETFs that could benefit from the still-solid the energy market.
Shelter and Real Estate: Rising Costs and Strong Demand
The shelter index, a key contributor to the overall CPI increase, rose 0.4% sequentially in April. Year over year, the index was up 8.1%. Investors can consider ETFs like the iShares U.S. Real Estate ETF (IYR - Free Report) or the Vanguard Real Estate Index Fund (VNQ - Free Report) to gain exposure to this sector, which is experiencing strong demand and rising prices.
Auto Sector: Opportunities in Used Cars and Insurance
The used cars and trucks index increased by 4.4% sequentially, while motor vehicle insurance rose by 1.4%. Price for new vehicles gained 5.4% year over year but dropped 0.2% sequentially.
ETFs such as the iShares U.S. Consumer Services ETF (IYC - Free Report) , First Trust S-Network Future Vehicles & Technology ETF (CARZ - Free Report) and the SPDR S&P Insurance ETF (KIE - Free Report) could provide investors with exposure to these segments.
Healthcare: A Mixed Bag of Performance
The medical care index remained unchanged in April, with hospital services and prescription drugs experiencing moderate increases. The Health Care Select Sector SPDR Fund (XLV - Free Report) and the iShares U.S. Healthcare ETF (IYH - Free Report) offer investment opportunities in this sector.
Transportation: Still-Hot But Showing Signs of Cooling
Transportation services inflation was up 11% year over year but declined 0.2% sequentially. SPDR S&P Transportation ETF (XTN - Free Report) represents the transportation segment of the S&P Total Market Index.