Improved Holiday Sales to Boost Retail, Consumer ETFs | ETF Trends

Gearing up for a busy shopping season, the retail and consumer discretionary sector exchange traded funds may experience a little more holiday cheer.

So far this year, the retail and consumer sectors have been underperforming the broader market. The SPDR S&P Retail ETF (NYSEArca: XRT) has declined 2.0% and Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) is up 0.6% year-to-date, whereas the S&P 500 index increased 8.0%. [Retail ETFs: Increased Store Hiring Ahead of Holiday Shopping]

However, the sectors could turn around as sales pick up this year. According to the National Retail Federation, U.S. retail sales are expected to increase 4.1% this holiday season year-over-year, compared to the 3.1% rise in 2013 and the average growth of 2.9% over the past decade, reports Nandita Bose for Reuters.

“Retailers could see a welcome boost in holiday shopping, giving some companies the shot in the arm they need after a volatile first half of the year and an uneventful summer,” NRF’s president and chief executive officer, Matthew Shay, said.

Additionally, the U.S. Commerce Department has revealed that U.S. consumers are spending more. American families spent 0.5% more in August month-over-month while income increased 0.3%. The slow wage increase, though, may keep spending growth subdued.

“While expectations for sales growth are upbeat, it goes without saying there still remains some uneasiness and anxiety among consumers when it comes to their purchase decisions,” Shay added.

Additionally, NRF’s unit expects a 8% to 11% rise in online holiday sales as well.