For investors seeking momentum, Consumer Discretionary Select Sector SPDR ETF (XLY Quick QuoteXLY - Free Report) is probably on the radar. The fund just hit a 52-week high and is up 37.02% from its 52-week low price of $147.83/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea of where it might be headed:

XLY in Focus

The underlying Consumer Discretionary Select Sector Index seeks to provide an effective representation of the consumer discretionary sector of the S&P 500 Index. The product charges 9 bps in annual fees (See: All Consumer Discretionary ETFs).

Why the Move?

The consumer discretionary corner of the broad stock market has been an area to watch lately, given the dovish stance of the Fed and interest rate cut in September. Rising market expectation of another interest rate cut in 2024 is acting as a key tailwind for the fund. Low rates reduce the cost of borrowing, making interest rate sensitive sectors like consumer discretionary appealing investment options.

Several factors, including a resilient economy and a continuous surge in the technology sector, have boosted the sector’s prospects.  

More Gains Ahead?

Currently, XLY has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. However, it might continue its strong performance in the near term, with a positive weighted alpha of 31.48, which gives cues of a further rally.