For investors seeking momentum, Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) is probably on radar now. The fund just hit a 52-week high and is up about 27% from its 52-week low price of $87.89/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 on where it might be headed:
XLY in Focus
XLY focuses on the consumer discretionary segment of the U.S. market. It has a large-cap focus with key holdings in Internet & direct marketing retail, specialty retail, media, and hotels restaurants & leisure segments. It charges investors 13 basis points a year and is largely concentrated on Amazon (AMZN - Free Report) , which accounts for one-fourth of the portfolio (see: all the Consumer Discretionary ETFs here).
Why the Move?
The consumer discretionary sector has been an area to watch lately given the series of positive news flow that has spread optimism and bullishness in the space. In particular, unemployment dropped to the lowest level since 2000 while retail sales rose the most in six months in May. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose the most in five months by 0.6% in April, while consumer confidence rebounded near the 18-year high in May. Per the latest survey, consumer sentiment rose to the highest level in three months early in June.
More Gains Ahead?
Currently, XLY has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook, suggesting that the outperformance could continue for months. Further, many of the segments that make up this ETF have a strong Zacks Industry Rank, so there is definitely still some promise for those who want to ride on this surging ETF a little longer.
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