Retail ETFs Holding Near Highs After Sales Data Offers Encouragement

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Stocks kicked off today’s session with a rally thanks to encouraging M&A activity along with upbeat economic data. Shares of Safeway (SWY) popped upwards of 8% as the bellwether U.S. grocery chain announced it is selling its Canadian stores; the bulls also appreciated the latest retail sales report, which came in just above analysts’ expectations [see The Best Dividend ETF For Every Investment Objective].

May Retail Sales Better-Than-Expected

The U.S. Census Bureau report from this morning showed an uptick in retail sales growth over the past month, helping to add fundamental fuel to the ongoing rally on Wall Street. May retail sales totaled roughly $421.1 billion, marking a 0.6% increase from last month’s reading, and also surpassing analysts’ estimates of 0.5%. Sales data was largely bolstered by a surge in auto demand; in fact, excluding auto sales, May retail sales increased by only 0.3% [see also 5 Reasons Not to Flee Non-US Dividend Stocks].

Retail ETFs Performance Recap

Retail sales have been spotty over the last few months with auto sales accounting for a bulk of the growth; this has led many to worry  that consumers are not as confident as the month-end data has suggested. Nonetheless, retail ETFs continue to climb higher as bullish momentum hasn’t evaporated from this segment of the market; consider the performance of the largest ETF in this sector, the SPDR S&P Retail ETF (XRT, A-), versus the broad U.S. market as represented by the S&P 500:

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XRT has gained a stellar 24% year-to-date as improving economic conditions have resonated well with consumer spending habits. From a technical perspective, this ETF remains in a steep upward-sloping channel with short-lived pullbacks; XRT is flirting with record highs as it looks to settle above $78 a share and surpass its peak of $79.56 a share set on 5/22/2013.

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Disclosure: No positions at time of writing.

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