Will ETFs Gain as US Consumer Sentiment Improves in September?

The U.S. consumer sentiment has marginally improved amid rising concerns about surging coronavirus cases and inflationary levels. The University of Michigan’s preliminary consumer sentiment inched up to 71 in September from 70.3 last month. The metric, however, lagged market’s forecast of 72, per a Bloomberg survey of economists.

rose to 59.9 in August  , all Consumer Discretionary ETFs, Click to get this free report, Zacks Investment Research

– Zacks

The measure of current economic conditions slipped to 77.1 in September from August’s 78.5. Meanwhile, a gauge of consumer expectations edged up to 67.1 in September from 65.1 in the previous month.

Moving on, one-year inflation expectation increased to 4.7% (the highest since 2008) in September from 4.6% in August. Meanwhile, the survey’s five-year inflation outlook remained steady at 2.9% in September.

In this regard, Surveys of Consumers chief economist Richard Curtin, said that “The steep August falloff in consumer sentiment ended in early September, but the small gain still meant that consumers expected the least favorable economic prospects in more than a decade,” (per a Reuters article).

Notably, consumers seem to be disturbed about the rising prices of homes, vehicles and household durables. In fact, the buying attitude for vehicles and homes is contracting.

Current U.S. Economic Scenario

Investors have their eyes on the minutes from the Fed’s two-day policy meeting that will begin on Sep 21. Fears surrounding the rising inflationary levels have aggravated as the producer price index witnessed the largest annual surge since November 2010 (per a CNBC article). The metric rose 0.7% in August and 8.3% year over year. It is being speculated that rising inflation levels may build more pressure on the Fed to tighten monetary policies.

Several economic data releases are also weighing on investors’ minds. The U.S. economy added only 235,000 jobs in August 2021 (the lowest in seven months). The metric lagged the forecast of 750,000 as a surge in COVID-19 infections kept companies from hiring and workers from actively looking for a job. Consumer confidence in the United States slipped to a six-month low in August.

The latest update on U.S. industrial output looks disappointing as the damages from Hurricane Ida and the ongoing health crisis took a toll on the metric. The consistent crunch in raw material supplies and labor as a result of the pandemic has been a serious concern. Per the Fed’s recently-released data, total industrial production rose 0.4% in August versus an increase of 0.8% in July.

There are still certain positive developments that can help stimulate a market rally. President Joe Biden has outlined a very effective plan to increase the vaccination rate and control the outbreak. He has made it mandatory for federal employees to get the COVID-19 vaccination, per a CNBC article. The Biden government will also issue guidelines to the Labor Department for imposing vaccine mandates for employers with more than 100 employees or run weekly tests.

The latest retail sales data has pleasantly surprised investors. The metric rose 0.7% sequentially in August 2021, comparing favorably with market expectations of a 0.8% decline, per a CNBC article.

The latest ISM Manufacturing Purchasing Managers’ Index (PMI) data for the United States is painting a rosy picture for the industrial sector. The metric rose to 59.9 in August  from 59.5 in July and surpassed forecasts of 58.6, per a Reuters article. Any reading above 50% indicates expansion in U.S. manufacturing activities. Notably, the manufacturing sector, which makes up 11.9% of the U.S. economy, saw the reading expanding for the 15th consecutive month.

ETFs That Might Gain

The nominal improvement in consumer sentiment might support the consumer discretionary sector, which attracts a major portion of consumer spending amid rising inflation levels. Here we have highlighted the four most popular funds that target the broader consumer discretionary sector (see all Consumer Discretionary ETFs):

The Consumer Discretionary Select Sector SPDR Fund XLY

This is the largest and most popular product in the consumer discretionary space, with AUM of $19.94 billion. It tracks the Consumer Discretionary Select Sector Index. The fund charges 12 basis points (bps) in fees per year and carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook (read: ETF Areas to Gain From the Upcoming Holiday Shopping Season).

Vanguard Consumer Discretionary ETF VCR

This fund currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index. VCR charges investors 10 bps in annual fees. The product has managed $6.70 billion in its asset base and carries a Zacks ETF Rank #1 (Strong Buy), with a Medium-risk outlook (read: Will ETFs Gain on Starbucks’ Q3 Earnings Beat Amid Pandemic?).

First Trust Consumer Discretionary AlphaDEX Fund FXD

This fund tracks the StrataQuant Consumer Discretionary Index, which employs the AlphaDEX stock-selection methodology to select stocks from the Russell 1000 Index. FXD has AUM of $1.99 billion. It charges 63 bps in annual fees and has a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook.

Fidelity MSCI Consumer Discretionary Index ETF FDIS

This fund tracks the MSCI USA IMI Consumer Discretionary Index. The product has amassed $1.62 billion in its asset base. It charges 8 bps in annual fees from investors and carries a Zacks ETF Rank #2, with a Medium-risk outlook (read: ETFs to Rise on Full FDA Approval for Pfizer COVID-19 Vaccine).


Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports

 

Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports

 

Fidelity MSCI Consumer Discretionary Index ETF (FDIS): ETF Research Reports

 

First Trust Consumer Discretionary AlphaDEX ETF (FXD): ETF Research Reports

 

To read this article on Zacks.com click here.

 

Zacks Investment Research

Internet Explorer Channel Network
News Related

OTHER NEWS

Central bank chief refutes rumors of government intervention in rate hike

Bank of Korea Gov. Lee Ju-yeol attends a parliamentary audit held at the National Assembly at the National Assembly in Seoul on Friday. (Yonhap)South Korea’s monetary policy chief on Friday ... Read more »

Inside the Government's bold plan to funnel pension funds into infrastructure

When the biggest names in global finance arrive in London next week for the Government’s investment summit, ministers will be focused on convincing the room full of influential attendees to ... Read more »

S. Korea's finance chief voices concerns over US info-sharing request for chipmakers

This photo, provided by the Ministry of Economy and Finance on Friday, shows South Korean Finance Minister Hong Nam-ki (L) shaking hands with US Treasury Secretary Janet Yellen ahead of ... Read more »

Auto exports dip by more than 20% in Sept. amid chip shortage

Electric car charging station in Seoul. (Yonhap)South Korea’s exports of automobiles fell more than 20 percent last month, ending eight months of on-year growth, amid the extended global supply shortage ... Read more »

S. Korea to resume discount coupon program to spur spending

Lee Eog-weon (Yonhap)South Korea plans to resume discount coupon programs aimed at boosting private spending as the country is preparing to move into a phase of “living with COVID-19” in ... Read more »

It Takes a Village: How Blockchain, Crypto and NFTs Ensure Digital Trust

It’s everywhere. Entrepreneurs, businesses and people, in general, are talking about the innovative technology known as blockchain — and buying into its importance. But what exactly is blockchain, and why is it so ... Read more »

Southwest Airlines Is Giving Out Vouchers for Passengers Caught in Cancellation Chaos

The past weekend was a disaster of sorts for Southwest Airlines. The Dallas-based airline has canceled more than 2,000 flights since Saturday, disrupting travel plans for thousands of customers. Now, the ... Read more »

Mark Cuban Heralds Ethereum, Bitcoin

Mark Cuban has some advice for people who are new to investing in cryptocurrency. SOPA Images | Getty Images “As an investment, I think ethereum has the most upside,” he ... Read more »

Cloud Kitchens Entrepreneurs Share New Trends In The Space

Cloud kitchens are today in vogue. As customers prioritize health and hygiene over other things, ordering food seems to be a safer option. And, they do not seem to mind ... Read more »

How the 'Death' of Journalism Means More Accurate News

The internet brought many benefits into our lives, but it also came with new concerns, such as misinformation and fake news. Readers are growing wise to the deceptions out there, ... Read more »

The Rise of Retail Investors as the New Powerhouse Traders

Retail investors are the newest wave on Wall Street. Over the past 12-18 months, “armchair trading” became mainstream. In other words, retail investors who make investment decisions without regard to ... Read more »

Bewakoof: A Brand That Is As Unique As The Name

Bewakoof, the name itself stands apart. It is definitely not one of the run-of-the-mill names. It’s quirky, youthful, unique and attracts your attention immediately.  Company Handout For this direct-to-consumer (D2C) ... Read more »

Elon Musk Had a Few (Surprisingly Gracious) Words for William Shatner Ahead of Space Flight

William Shatner is now officially the oldest person to travel into space at age 90, thanks to a successful launch on Wednesday in the New Shepard rocket ship alongside three other crew ... Read more »

Unemployment Claims Fall to Lowest Level Since Beginning of COVID-19 Pandemic Last Year

Initial jobless claims dropped below 300,000 for the first time since the first part of the COVID-19 pandemic when lockdowns were commonplace, according to a report released by the Labor Department on Thursday. The ... Read more »

Elon Musk Relists Silicon Valley Home at Discount

Elon Musk’s Silicon Valley home is back on the market, but the billionaire reduced its price.  Anadolu Agency | Getty Images It was originally listed for $37.5 million, but its ... Read more »

What Makes Dubai the Most-Preferred Investment Landscape for Indian HNIs

Where you invest your money matters, and specific regions may offer investors more than others opening opportunities to increase returns and gain a substantial footing. Dubai is proving to be ... Read more »

American Households' Heating Bills Are Expected to Spike This Winter: Federal Agency

The average heating cost for a U.S. household is forecasted to see a double-digit increase this winter, according to the U.S. Energy Information Administration (EIA) in its October winter fuels ... Read more »

These Are the Most Hated Brands in Every Country in the World (Infographic)

There’s nothing that brings people together like a shared hatred, even if the enemy is an entity rather than a person. Social media means everyone’s a critic, and there’s almost ... Read more »

Prince William Slams Space Billionaires, Says We Need to Focus on Saving Earth

One day after Star Trek actor William Shatner became the oldest person to go to space, traveling aboard Amazon founder Jeff Bezos‘ Blue Origin rocket and capsule, Prince William criticized those ... Read more »

Here's how much 10 big banks have cut their China growth forecasts

Workers labor in a factory of bathing suits in Jinjiang in southeast China's Fujian province Tuesday, Sept. 28, 2021.Feature China | Barcroft Media | Getty Images BEIJING — Ahead of ... Read more »

Contactless card payments spend cap more than doubles to £100 today

© Provided by Daily Mail MailOnline logo Shoppers can now spend £100 with a tap of their debit or credit card as the contactless limit more than doubles today. But ... Read more »

Contactless limit rises to £100 today - but many shops could take weeks to implement it

Shoppers in the UK can now make payments of up to £100 with a single tap of their card. The contactless card payment limit has increased from £45 to £100, ... Read more »

Stock futures are flat after S&P has best day since March on strong earnings

U.S. stock index futures were little changed during overnight trading on Thursday, after the S&P 500 posted its best day since March on stronger-than-expected earnings. Futures contracts tied to the ... Read more »

Pension warning as Rishi Sunak fee change could mean Britons work five years longer

Pension saving is often considered one of the best ways for people to plan towards their retirement. Through formal savings and investment vehicles, Britons can build up compound interest returns ... Read more »

Almost TWO MILLION more working poor since Tories came to power, research shows

Nearly two million more working people are living in poverty since the Tories came to power in 2010, research reveals. A Labour study of Office for National Statistics data found ... Read more »

PhonePe revenue up 85%, losses down 44% in FY21

PhonePe, a digital payments platform backed by US-based retailer Walmart Inc and homegrown ecommerce entity Flipkart, has reported revenue from operations of Rs 690 crore in the previous financial year, ... Read more »

71% of retirement age investors worry rising inflation will negatively affect their savings, survey finds

Peter Cade | Getty Images Federal Reserve officials are worried that inflation could last longer than they had anticipated, according to minutes from a recent meeting released this week. Now, ... Read more »

PNB Housing Finance shelves share sale plan citing legal delays

PNB Housing Finance has shelved its proposed Rs 4000 crore preferential issue to private equity giant Carlyle Group and co investors including former HDFC Bank CEO Aditya Puri, General Atlantic ... Read more »

Apple has lost $229 billion in market cap since its September high — here's what's next

Apple shares bounced back Thursday, but losses since its record highs remain sharp. The stock has fallen 9% since that September peak, shedding roughly $229 billion in market cap. That's ... Read more »

How to set a contactless card spending cap to avoid the new £100 limit

The amount of money you can spend in a contactless transaction is set to more than double from Friday 15 October. © Mobile payment systems technically do not have contactless ... Read more »

Lloyds customer couldn't access his account for a week after bank declared him dead

John Hill first became concerned when he received an email from his utility provider to say his direct debit had been cancelled. He didn’t know what was going on but ... Read more »

More than a third of jobless Americans are still long-term unemployed — and without benefits

People receive information as they attend a job fair at SoFi Stadium on Sept. 9, 2021, in Inglewood, California. PATRICK T. FALLON | AFP | Getty Images More than a ... Read more »

‘Lloyds Bank wrongly declared me dead and shut down my accounts'

A Lloyds customer was locked out of his bank account for a week after the bank wrongly declared him dead in a case of mistaken identity. © Provided by The ... Read more »

Universal Credit: Robert Jenrick criticised for admitting the timing of the £20 uplift cut was ‘unfortunate'

Robert Jenrick, who was sacked from the Cabinet in the Prime Minister’s recent Cabinet reshuffle, has said the timing of the Universal Credit was “unfortunate” as it has coincided with ... Read more »

Borrowers have a year to get a second shot at public service loan forgiveness

RJ Sangosti/MediaNews Group/The Denver Post via Getty Images | Denver Post | Getty Images People pursuing public service loan forgiveness know how difficult the program can be to successfully navigate. ... Read more »

Here are 5 benefits of a health savings account that you may not know about

Brothers91 | E+ | Getty Images You may want to get to know about a health savings account a little better. HSAs are known for their triple tax advantage — ... Read more »

How to Silence the Impostor Syndrome

Do you ever worry about being exposed as a “fraud?” You’re not alone. It’s actually quite common for people to feel like imposters. In fact, approximately 70 percent of people ... Read more »

Ashmore assets hemorrhage $3.1bn as China woes rock the EM specialist

© Provided by This Is Money MailOnline logo Asset management firm Ashmore Group has seen its assets under management plummet by £3.1billion in just three months as large investors pulled ... Read more »

Op-ed: Congress needs to pass retirement provisions in the reconciliation bill

10'000 Hours | DigitalVision | Getty Images As Congress wrangles over many proposals within the Build Back Better reconciliation bill, one section holds the promise of addressing the anxiety millions ... Read more »

‘I'm waiting for a market crash before I buy American stocks'

Anoop Rattan, a 54-year-old from London who works in financial services, took control of his investments in 2014, switching £78,000 from workplace schemes into a self-invested personal pension. He has ... Read more »