ETF Trends
ETF Trends

McDonald’s (NYSE: MCD) gave indigestion to exchange traded funds (ETFs) following consumer-discretionary stocks and the food and beverage sector after the restaurant giant reported quarterly results Thursday.

McDonald’s shares were down 2% in early trading Thursday with investors worried about profit margins and the impact of rising food costs.

“Our dedication to building the McDonald’s business by optimizing our menu, modernizing the restaurant experience and broadening accessibility continues to drive our global performance,” said McDonald’s CEO Jim Skinner in the earnings statement. “Despite the challenges of the current economic environment, I am confident that McDonald’s can continue to grow by listening to our customers.”

McDonald’s is a big holding in consumer-discretionary ETFs. [Consumer Discretionary ETFs on Menu After McDonald’s Results.]

McDonald’s also represents 5% of PowerShares Dynamic Food & Beverage Portfolio (NYSEArca: PBJ). The ETF is up more than 6% so far this year, in line with the S&P 500. Other top holdings include Starbucks (NasdaqGS: SBUX) and PepsiCo (NYSE: PEP).

“We remained concerned about a correction in the restaurant industry as food cost pressures become more pronounced and rising gas prices become more of a top-line growth deterrent, but we believe McDonald’s is the best-positioned operator to offset these pressures and offers a safe haven for investors,” Morningstar analyst R.J. Hottovy wrote in a research note Thursday.

PowerShares Dynamic Food & Beverage Portfolio


The opinions and forecasts expressed herein are solely those of John Spence, 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.