Financial, Consumer Discretionary ETFs Hit By Goof

Goldman Sachs & Co. admitted that it made a mistake in upgrading the financial and consumer discretionary sectors, putting related exchange traded funds (ETFs) back in a funk.

Seven weeks ago, the sectors were boosted by Goldman on the belief that they would benefit from bank recapitalizations and fiscal stimulus, something they now admit was "clearly wrong." The recommendation had been to overweight in consumer discretionary and maintain a neutral weight in financials, report Supantha Mukherjee and Dinesh Nair for Reuters.

Now it says to underweight both.

The reversal of opinion sent several of the related ETFs lower, including:

• Financial Select Sector SPDR (XLF), down 22.8% year-to-date
• Regional Bank HOLDRs (RKH), down 26.6% year-to-date
• Consumer Discretionary SPDR (XLY), down 8.2% year-to-date
• iShares Dow Jones US Consumer Goods (IYK), down 9.8% year-to-date

For full disclosure, some of Tom Lydon’s clients own shares of RKH.