Retail and consumer discretionary ETFs were the steepest sector decliners Wednesday on reports U.S. holiday sales were the slowest since 2008.

Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) and SPDR S&P Retail ETF (NYSEArca: XRT) were both down more than 1% in recent trading.

“In 2012, the shopping season was disrupted by bad weather and consumers’ rising uncertainty about the economy,” the Financial Times reports.

Retail holiday shopping rose o.7% from the year-ago period during the two months leading up to Christmas, well below analyst expectations, according to a MasterCard unit estimate.

Weak sales were blamed on superstorm Sandy and worries over the U.S. fiscal cliff.

“It’s been a challenging holiday season,” said David Jaffe, CEO of Ascena Retail Group, in a report.

Holiday sales are “slightly softer” than last year, he added. “People weren’t in a shopping mood until the end of the season.”

Still, retail and consumer discretionary ETFs have been among the top sector performers in 2012. XLY is up 22.5% year to date, compared with a gain of 15.1% for SPDR S&P 500 (NYSEArca: SPY), according to Morningstar. [Retail ETFs Catch a Bid]

The consumer discretionary ETF rose to a lifetime high earlier this month. [Sector Fund at All-Time High on Retail Sales]

Consumer Discretionary Select Sector SPDR


Full disclosure: Tom Lydon’s clients own SPY.

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