Retail exchange traded funds (ETFs) Retail HOLDRs (RTH) and SPDR S&P Retail (XRT) might benefit from some recent retail earnings reports. Of the 31 retailers that reported their store sales for August today, 20 outperformed their estimates, according to Thomson Financial.
Wal-Mart (WMT) shares rose 0.6% from the news that its stores sales rose 3.1% in August, which is higher than the predicted 1 to 2% increase, according to Michael Mackenzie and Anuj Gangahar for the Financial Times. Wal-mart is a holding in XRT and the largest holding in RTH at 16.5%. Target’s (TGT) shares rose 2.2% after its stores sales increased 6.1% last month. Target is the third largest holding in RTH at 9.7% and is a holding in XRT. Another XRT holding, American Eagle Outfitters (AEO), saw its stores sales increase 9% because of a later tax-free shopping period in Texas and Florida. However, its shares remain flat.
Currently, RTH is flat and XRT is down 4.2% year-to-date.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.