ETF Trends
ETF Trends

The Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) entered Wednesday with a meager 2.6% year-to-date gain, good (or bad) enough to highlight the discretionary sector’s as the biggest laggard in the S&P 500.

With some help from some of the group’s most familiar names, the consumer discretionary sector looks like it is shaking its doldrums, so much so that XLY is one of nearly 40 exchange traded funds that have hit new all-time highs to this point in Wednesday’s session.

Impressively, XLY is entering new high territory on a day in which Target (NYSE: TGT), the ETF’s seventeenth-largest holding, pared its annual profit guidance for the second time in three months, according to the Associated Press. Target, the third-largest U.S. retailer, “said it now expects full-year adjusted earnings to be in the range of $3.10 to $3.30 per share, compared with prior guidance of $3.60 to $3.90. Analysts had expected $3.50 per share,” the AP reported.

That is not derailing the stock nor XLY. In fact, XLY, the largest discretionary ETF, has been on a tear as of late. The ETF entered Wednesday with a gain of almost 4% since the start of August. Only one of the ETF’s top-10 holdings, Time Warner (NYSE: TWX), has traded lower this month and that is the result of Rupert Murdoch’s 21st Century Fox (NasdaqGS: FOXA), another XLY top-10 holding, pulling its $75 billion takeover offer for Time Warner. [Tuning Into the Media ETF]

Although Time Warner is off this month, it is undeniable that other media names are helping XLY. Dow component Walt Disney (NYSE: DIS) and 21st Century Fox are up 5.5% and 12.4%, respectively, since the calendar turned to August.

Those stocks are not alone in driving XLY and rival discretionary ETFs higher. Coming into Wednesday, Home Depot (NYSE: HD) had surged 10.6% this month and the largest home improvement retailer is higher by another 2.7% today. Amazon (NasdaqGS: AMZN), one of the biggest drags on XLY this year after previously falling into bear market territory, has an August gain of 9.1%. [Home Depot Boosts This ETF]

Although XLY has been on the rise, investors pulled almost $258 million from the ETF over the past week. Still, only five ETFs have added more third-quarter assets than the $1.42 billion tacked on by XLY.

Consumer Discretionary Select Sector SPDR

ETF Trends editorial team contributed to this piece.

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.