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Inflation Cools in April: 5 Sector ETFs & Stocks to Thrive
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In April, inflationary pressures showed signs of easing, with the Consumer Price Index (CPI) on a "core" basis rising 3.6% year over year, in line with expectations. This marked a cooling from the 3.8% increase observed in March. Monthly core price increases also aligned with expectations at 0.3%, down from 0.4% in the previous three months.
Despite this cooling, below we highlight a few sector ETFs and stocks that may gain in the near term as the price gains remained steady in those business areas.
The transportation index jumped 0.9% sequentially in April and rose 11.2% year over year.
The fund XTN tracks the S&P Transportation Select Industry Index, which represents the transportation segment of the S&P Total Market Index. The fund has a Zacks Rank #2 (Buy).
As far as important stocks are concerned, Zacks Rank #3 (Hold) FedEx (FDX - Free Report) may be played. It is the leader in global express delivery services. The company provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the FedEx brand.
Real Estate – Real Estate Select Sector SPDR ETF (XLRE - Free Report)
Weighted shelter makes up 32.77% of CPI, of which 7.8% is rent and 23.68% is private housing, per data from MacroMicro. The shelter index jumped 0.4% in April. Index increased 5.5% annually.
The underlying Real Estate Select Sector Index includes securities of companies from the following industries real estate management and development and REITs, excluding mortgage REITs. The fund yields 3.49% annually and charges 9 bps in fees.
Meanwhile, Host Hotels & Resorts (HST - Free Report) , has a Zacks Rank #3. It is one of the leading lodging real estate investment trusts (REITs), which engages in the ownership, acquisition and redevelopment of luxury and upper-upscale hotels in the United States and abroad.
The food-away-from index jumped 0.3% in April. Price index increased 4.1% annually.
The AdvisorShares Restaurant ETF is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenue from the restaurant business.
CAVA Group Inc. (CAVA - Free Report) , which has a Zacks Rank #2, is a category-defining Mediterranean fast-casual restaurant brand.
Healthcare – Health Care Select Sector SPDR ETF (XLV - Free Report)
The medical care index rose 0.4% sequentially in April. The index has advanced 2.7% annually. The index grew 0.6% sequentially in March, indicating strong momentum in price gains.
The underlying Health Care Select Sector Index includes companies from the following industries: pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology.
HCA Healthcare (HCA - Free Report) , which has a Zacks Rank #2 deserves a mention. It is the largest non-governmental operator of acute care hospitals in the United States.
The apparel price index rose 1.2% sequentially in April. The index has gained 1.3% annually. The index grew 0.7% sequentially in March and 0.6% in February, again pointing to a strong price gain trend.
The fund gives exposure to US retail stocks. Apparel retail takes about 21% of the fund. The fund charges 35 bps in fees.
The Gap (GPS - Free Report) is a premier international specialty retailer offering a diverse range of clothing, accessories, and personal care products. The fund has a Zacks Rank #1 (Strong Buy).
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Inflation Cools in April: 5 Sector ETFs & Stocks to Thrive
In April, inflationary pressures showed signs of easing, with the Consumer Price Index (CPI) on a "core" basis rising 3.6% year over year, in line with expectations. This marked a cooling from the 3.8% increase observed in March. Monthly core price increases also aligned with expectations at 0.3%, down from 0.4% in the previous three months.
Despite this cooling, below we highlight a few sector ETFs and stocks that may gain in the near term as the price gains remained steady in those business areas.
Sector ETFs to Gain
Transportation – SPDR S&P Transportation ETF (XTN - Free Report)
The transportation index jumped 0.9% sequentially in April and rose 11.2% year over year.
The fund XTN tracks the S&P Transportation Select Industry Index, which represents the transportation segment of the S&P Total Market Index. The fund has a Zacks Rank #2 (Buy).
As far as important stocks are concerned, Zacks Rank #3 (Hold) FedEx (FDX - Free Report) may be played. It is the leader in global express delivery services. The company provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the FedEx brand.
Real Estate – Real Estate Select Sector SPDR ETF (XLRE - Free Report)
Weighted shelter makes up 32.77% of CPI, of which 7.8% is rent and 23.68% is private housing, per data from MacroMicro. The shelter index jumped 0.4% in April. Index increased 5.5% annually.
The underlying Real Estate Select Sector Index includes securities of companies from the following industries real estate management and development and REITs, excluding mortgage REITs. The fund yields 3.49% annually and charges 9 bps in fees.
Meanwhile, Host Hotels & Resorts (HST - Free Report) , has a Zacks Rank #3. It is one of the leading lodging real estate investment trusts (REITs), which engages in the ownership, acquisition and redevelopment of luxury and upper-upscale hotels in the United States and abroad.
Restaurants – AdvisorShares Restaurant ETF (EATZ - Free Report)
The food-away-from index jumped 0.3% in April. Price index increased 4.1% annually.
The AdvisorShares Restaurant ETF is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenue from the restaurant business.
CAVA Group Inc. (CAVA - Free Report) , which has a Zacks Rank #2, is a category-defining Mediterranean fast-casual restaurant brand.
Healthcare – Health Care Select Sector SPDR ETF (XLV - Free Report)
The medical care index rose 0.4% sequentially in April. The index has advanced 2.7% annually. The index grew 0.6% sequentially in March, indicating strong momentum in price gains.
The underlying Health Care Select Sector Index includes companies from the following industries: pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology.
HCA Healthcare (HCA - Free Report) , which has a Zacks Rank #2 deserves a mention. It is the largest non-governmental operator of acute care hospitals in the United States.
Retail Apparel – SPDR S&P Retail ETF (XRT - Free Report)
The apparel price index rose 1.2% sequentially in April. The index has gained 1.3% annually. The index grew 0.7% sequentially in March and 0.6% in February, again pointing to a strong price gain trend.
The fund gives exposure to US retail stocks. Apparel retail takes about 21% of the fund. The fund charges 35 bps in fees.
The Gap (GPS - Free Report) is a premier international specialty retailer offering a diverse range of clothing, accessories, and personal care products. The fund has a Zacks Rank #1 (Strong Buy).