Rising prices in June smacked down consumer spending and related exchange traded funds (ETFs).

Spending, after adjusted for inflation, fell as shoppers were hit by the biggest price increases in nearly three decades. Those prices are reflected mostly by the big jump in gasoline costs, which lifted spending by 0.9%. But after factoring that out, spending actually fell 0.2%, reports Martin Crutsinger for the Associated Press.

The news sent Wall Street in mixed directions, and oil dropped to $121.20 a barrel, at one point falling below $120 for the first time since early May. The lower prices appear to be assuaging investor worries over this morning’s inflation reports, says Tim Paradis for the Associated Press.

Consumer spending is two-thirds of the economy, so once that drops off, it isn’t pretty. Oil and gas have been retreating in the last few weeks, and if this keeps up, dollar bills could begin going toward things other than fuel.

Natural gas futures are now at $8.765 per 1,000 cubic feet, while the average gallon of gas is down to $3.881.

ETFs affected by consumer spending and fuel prices include:

  • Retail HOLDRs (RTH), down 6.2% year-to-date
  • SPDR S&P Retail (XRT), down 9.9% year-to-date
  • United States Oil (USO), up 33.3% year-to-date
  • United States Gasoline (UGA), up 14.9% year-to-date
  • iPath S&P GSCI Crude Oil Total Return Index (OIL), up 32.7% 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.