State Street Consumer Discretionary Select Sector SPDR ETF

XLY

Market cap $22.4B

Sector investing — it's a typical strategy for advisors if their clients are looking beyond broad market exposure by targeting a specific sector. The concept is fairly straightforward, but implementing the strategy is not as simple as it sounds.

The Investment Committee debate the consumer discretionary sector as consumer confidence beats.

The U.S. economy sent conflicting signals last week as a sharp deceleration in growth collided with unexpectedly stubborn inflation. While the S&P 500 managed to break its recent losing streak, the Federal Reserve's primary inflation gauge hit its highest level since early 2024, complicating the outlook for potential interest rate cuts later this year.

When the economy heats up and consumers open their wallets, they don't just buy more toothpaste.

Energy, basic materials, and defensive consumer stocks are in. Tech and financials are out.

The U.S. labor market showed further signs of cooling last week as private sector hiring slowed and job openings reached their lowest levels in over five years. While a brief government shutdown delayed official federal employment data, private reports and turnover summaries reinforced a narrative of diminishing demand for workers.

The State Street Consumer Discretionary Select Sector SPDR ETF (XLY) was launched on December 16, 1998, and is a passively managed exchange traded fund designed to offer broad exposure to the Consumer Discretionary - Broad segment of the equity market.

Months before Super Bowl LX kicks off at Levi's Stadium on February 9, the game was already being played, predicted, and celebrated across screens worldwide through companies held in the Amplify Video Game Leaders ETF (GAMR).

State Street Cons Disc Sel Sect SPDR Income ETF is rated 'hold,' reflecting defensive market positioning and sector underperformance. Despite poor consumer sentiment, retail sales and GDP growth remain resilient, driven by high-income spenders, but this dynamic is fragile. The XLY/XLP ratio's decline signals a shift toward defensiveness, suggesting XLY may underperform if market conditions weaken.

The final week of January saw a stark divergence between official policy and the American consumer's outlook. While the Federal Reserve maintained a “solid” view of economic growth, the public's mood plummeted to a decade-low amid sticky wholesale inflation.