Despite the disappointing sales data, consumer discretionary and retail exchange traded funds have been outperforming and hit all-time highs Friday.
Including the Market Vectors Retail ETF (NYSEArca: RTH), SPDR S&P Retail ETF (NYSEArca: XRT) and Consumer Discretionary Select Sector SPDR (NYSEArca: XLY), eight discretionary and retail ETFs reached new highs Friday.
Year-to-date, RTH increased 5.7%, XRT rose 1.5% and XLY advanced 3.2%. In contrast, the SPDR S&P 500 ETF (NYSEArca: SPY) gained 1.6% so far this year.
It would seem that a few knock out performances helped offset weakness in other areas of the space. For instance, online retailer Amazon (NasdaqGS: AMZN), which makes up 6.3% of XLY and 8.5%, helped support the ETFs after surging 29.5% over the past month on better-than-expected earnings. Additionally, Netflix (NasdaqGS: NFLX), which is 1.2% of XLY, also strengthened the space after jumping 43.3% over the past month on a rise in subscribers.
Nevertheless, large retailers and department stores plodded along as American consumers opted to stash away the cheap gasoline windfall instead of spending . According to the Commerce Department, retail sales dipped 0.8% in January, which marked the weakest start to the year after the strongest quarter of consumer spending since 2006, Bloomberg reports.
Specifically, sales dipped at clothing stores, sporting goods outlets, furniture stores and department stores. On the other hand, internet retailers, building material outlets and electronic stores saw sales rise.
“Consumers are basically seeing all these positives but they’re being a little more prudent about how they spend,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co., said in the article. “We’re not too concerned. Consumer spending is fine, it’s just not doing all that well given the very favorable fundamentals.”