Things Could Get Ugly For These ETFs

There have been some individual instances of impressive earnings reports and stock performances, but broadly speaking, the retail sector is scuffling and those struggles are reflected by the SPDR S&P Retail ETF (NYSEArca: XRT). XRT, the largest dedicated retail exchange traded fund, has been in a tailspin in the current quarter and some traders see the group’s misery continuing.

Amazon (NasdaqGS: AMZN) and Dow component Wal-Mart (NYSE: WMT) have recently helped XRT’s rival, the VanEck Vectors Retail ETF (NYSEArca: RTH), perform less poorly than XRT. XRT, an equal-weight ETF, has been plagued by slumping apparel retailers, among other corners of the flailing retail industry.

RTH covers the 25 largest U.S. companies involved in retail distribution, wholesalers, on-line, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers.

Related: America’s Less Dressed: 3 Factors Weighing On Retail ETFs

XRT slumped last week, marking the ETF’s fifth straight weekly loss.

“Consumer spending increased only at a 1.9 percent rate during the first quarter, leaving many retailers struggling to maintain sales leading into earnings season. Numbers improved in April as consumer spending rose to its highest in a year, but the boost was mostly fueled by online retailers instead of the traditional big names. Amazon is currently the ETF’s biggest holding,” reports CNBC.

The internet retail sub-industry revealed the highest earnings growth at 143.1% for all 13 retail sub-industries, John Butters, Senior Earnings Analyst at FactSet, said in a note.