Earnings Expectations Fuel Consumer ETFs

The Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) and rival consumer discretionary exchange traded funds are among this year’s best-performing sector ETFs and with earnings expectations for the sector high, XLY and friends could deliver even more upside for investors as 2017 moves forward.

Amazon.com Inc. (NASDAQ: AMZN), often the biggest holding in XLY and other cap-weighted discretionary ETFs, is boosting this group of funds. The e-commerce giant keeps surging and is at a point where its market value is exceeded by just a small number of S&P 500 companies.

Last year, the internet retail sub-industry revealed the highest earnings growth at 143.1% for all 13 retail sub-industries, according to FactSet. In contrast, the department store sub-industry reported the largest year-over-year drop in earnings of all 13 retail sub-industries at -47.8%. That bodes well for XLY and more focused ETFs, such as the Amplify Online Retail ETF (NasdaqGM: IBUY).

“On one hand, the consumer discretionary sector was the best-performing sector in April (and the second-best sector year to date); on the other, the consumer spending figure reported Friday was quite weak, with the Bureau of Economic Analysis announcing that personal consumption declined quarter over quarter in its advance estimate of first-quarter economic growth,” reports CNBC.