Exchange traded funds tracking consumer staples stocks are living up to their reputation as defensive investments in the latest market pullback.
Consumer Staples Select Sector SPDR (NYSEArca: XLP) was up 6.2% for the three months ended June 15, while the S&P 500 was slightly negative, according to investment researcher Morningstar.
Some investors are favoring defensive sectors such as consumer stapes and healthcare amid signs the economy is losing some of its zip. The thinking is that the companies’ products are required by consumers in any economic environment.. [Are Consumer Staples ETFs Getting Mixed Signals?]
“Consumer staples should continue to be a beneficiary of a weaker equity market,” says Merrill Lynch’s Mary Ann Bartels. “Although we expect the sector to continue to outperform the market, we are not convinced it is the new leadership in the market,” she said, as reported by Murray Coleman for Barron’s.
As gasoline prices are leveling out, consumer confidence is trending higher. This is giving Americans a more positive view of their finances. However, other supporting factors such as a weak job market, and a troubled housing sector are still giving defensive stocks an edge over others.