Stock exchange traded funds reversed early losses Thursday while retail ETFs gained ground after store operator Kroger (NYSE: KR) reported better-than-expected quarterly results.

Kroger shares rallied 4%. “Overall, first-quarter results looked solid, as rising food inflation appears to be getting passed through [to consumers],” Deutsche Bank analysts said in a note Thursday. They have a buy rating on the stock, citing Kroger’s “attractive valuation and accelerating sales.”

The shares are held in sector ETFs such as PowerShares Dynamic Retail (NYSEArca: PMR), Retail HOLDRS (AMEX: RTH), Rydex S&P Equal Weight Consumer Staples (NYSEArca: RHS) and SPDR S&P Retail ETF (NYSEArca: XRT).

In other sector ETFs, homebuilder funds rose Thursday after a report showing housing starts climbed in May, while Pier One (NYSE: PIR) was also out with quarterly earnings. [Homebuilder ETFs Higher]

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