However, investors’ appetite for utilities stocks could be tested this month as Fed fund futures currently assign a better than 55% probability that the Fed will boost rates following the upcoming June 17 meeting. Investors have already displayed concern about rate hikes by pulling nearly $551 million from the rate-sensitive XLU this year. [Investors Depart Bond Proxy ETFs]
Although it averages a modest June loss, the Health Care Select Sector SPDR (NYSEArca: XLV) is historically the second-best of the nine SPDRs this month, according to CXO. For as strong as XLV has been in recent years, it only ranks as one of the two best sector SPDRs in one other month besides June: January.
Up almost 10% this year, XLV is, by far, the best of the nine SPDRs. In the near-term, favorable seasonality for biotechnology stocks could boost XLV. The Memorial Day through Labor Day period is usually kind to biotech stocks. The $14.3 billion XLV allocates 20.4% of its weight to the biotech industry, its second-largest industry behind 42.7% to pharmaceuticals. Gilead Sciences (NasdaqGS: GILD) and Amgen (NasdaqGS: AMGN) are the biotech names found among XLV’s top 10 holdings. Those stocks combine for over 10% of the ETF’s weight. [Biotech ETFs not out for Summer]
Utilities Select Sector SPDR
