The consumer discretionary sector has been struggling this year and one of the drags on the group has been Dow component Home Depot (NYSE: HD), which entered Tuesday with a 2014 gain of just 1.9%.
Atlanta-based Home Depot is snapping out of that funk in a big way today with a gain of 6% on volume that is already more than double the daily average. The stock is benefiting from multiple catalysts. Home Depot said its profit in the most recently completed quarter rose to $2.1 billion from $1.8 billion a year earlier as sales jumped 5.7% to $23.8 billion. The company raised its full-year earnings guidance to $4.52 per share, up 10 cents from prior guidance.
Add to that, the Commerce Department said earlier today that housing starts surged 16% in July to an annual rate of 1.093 million units. That is good news for the do-it-yourself retailer and good news for some overlooked ETFs with healthy allocations to the stock. The new is welcome at a time when homebuilder and retail ETFs have been struggling to recapture lost momentum. [Homebuilders ETFs Deal With Tepid Data]
With Home Depot hitting a new all-time high today, the Market Vectors Retail ETF (NYSEArca: RTH) is going along for the ride. RTH is higher by 1.7% on above average volume, making it one of fewer than 50 ETFs to hit new all-time highs to this point in Wednesday’s session.
Home Depot is RTH’s fourth-largest holding with a weight of 7.4%. Rival Lowe’s (NYSE: LOW) follows at a weight of 5.3%. RTH has also benefited from an impressive rebound by Amazon (NasdaqGS: AMZN), which is up 9.2% this month. With Tuesday’s gains, RTH is up 4.3% this month, a performance that is better than triple the gains offered by Wal-Mart (NYSE: WMT), RTH’s largest holding at a weight of almost 10.4%. [Retail ETFs Look for Lost Magic]
An almost 5.2% weight to Home Depot is helping the PowerShares Dynamic Building & Construction Portfolio (NYSEArca: PKB) to the tune of a 1.1% gain.
Althought PKB is overlooked compared to its rivals, the SPDR S&P Homebuilders ETF (NYSEArca: XHB) and the iShares U.S. Home Construction ETF (NYSEArca: ITB), the PowerShares offering has some advantages.
First, PKB has the largest weight to Home Depot of the three homebuilders ETFs. Second, the ETF resides just 5.7% below its all-time high. ITB would need to nearly double to reclaim its pre-financial crisis highs while XHB would need to add nearly 41% to do the same. Home Depot is a top-10 holding in 15 ETFs, according to S&P Capital IQ data.
PowerShares Dynamic Building & Construction ETF
ETF Trends editorial team contributed to this article.