Consumer stocks and sector-related exchange traded funds are finally beginning to pick up their pace as falling oil prices leave consumers with more spending money ahead of the holiday season.

Over the past week, the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) increased 1.9%, whereas the S&P 500 index gained 0.4%. Nevertheless, XLY has underperformed the broader market this year, rising 4.7% year-to-date, compared to the S&P 500’s 12.4% rise.

Market observers argue that falling fuel costs, improved home prices and a lower unemployment rate means consumers have more money to spend on discretionary items, Financial Times reports.

“Consumer discretionary is a good way to play the health of the US economy, especially when you look overseas,” Margie Patel, a fund manager at Wells Fargo Asset Management, said in the article.

Barclays economists argue that a 20% dip in oil prices translates to $70 billion in consumer savings. West Texas Intermediate crude oil futures have declined about 29% since the June high.

Consumer discretionary stocks have also experienced improved third quarter results, with earnings rising 8% in the three month period ended September year-over-year. Looking ahead, S&P Capital analysts believe revenues and sales to accelerate from the fourth quarter of 2014 over the first two quarters of 2015.

Meanwhile, retailers are also looking better as consumer confidence levels reach their highest since 2007.

The SPDR S&P Retail ETF (NYSEArca: XRT) was up 1.4% over the past week and is 4.3% higher year-to-date. [Why This Retail ETF is Rising]

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