Consumer Discretionary Select Sector SPDR (XLY) is leading the nine major U.S. sectors by a slight margin so far this year with a total return of more than 20%.
The leading sector ETFs this year tend to be those that benefit from rising interest rates and an expanding economy.
In particular, consumer discretionary funds are benefitting from improving confidence as Americans are willing to spend more after saving rates jumped after the financial crisis. Consumer spending powers about 70% of the U.S. economy.
Last week, the University of Michigan said consumer sentiment held near a six-year high in June as home prices continue to rise.
“The survey shows Americans are feeling better about the economy, despite wild gyrations in the stock market,” USA Today reported.
Also last week, the Commerce Department said consumer spending rose 0.3% in May to erase the previous month’s decline.
“It’s still a picture of better growth, but there is little to suggest that we are going to get the kind of break-out growth that would entail a tighter environment from policymakers in the near future,” said Brian Levitt, an economist at OppenheimerFunds, in a Reuters article.
Next page: Consumer discretionary stocks on a multiyear tear