Consumer Discretionary ETFs Rally on Amazon's Q4 Surprise (NasdaqGS: AMZN) shares surged in response to a surprisingly upbeat fourth quarter earnings report, lifting consumer discretionary sector-related exchange traded funds.

On Friday, the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) rose 3.4%, the Vanguard Consumer Discretionary (NYSEArca: VCR) gained 3.3%, and the Fidelity MSCI Consumer Discretionary Index (NYSEArca: FDIS) was up 3.2%. Additionally, the ProShares Online Retail ETF (NYSEArca: ONLN), which takes on a long position in online retailers, increased 5.6%.

Meanwhile, Amazon shares jumped 15.8%, which was on pace for one of its biggest single-day gains ever. AMZN makes up 23.9% of ONLN’s underlying portfolio, 21.8% of XLY, 21.1% of VCR, and 20.8% of FDIS. Inc. shares rallied on Friday after the e-commerce giant surprised investors with a near doubling in profit over the holiday period after warning of supply chain problems that could have weighed on the company, the Wall Street Journal reports.

“As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to omicron,” CEO Andy Jassy said in the statement. “Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic.”

The e-commerce stock climbed before the bell after reporting $137.4 billion in quarterly revenue, compared to $125.6 billion a year earlier. Profits also gained to $14.3 billion, compared to $7.2 billion, which reflected Amazon’s improving management of labor and supply costs.

Market observers were also impressed by the tech giant’s strong performance in its cloud division, a huge profit stream that is largely driven from an investment in Rivian Automotive Inc., and a price hike in its flagship Prime membership offering, Bloomberg reports.

Amazon’s cloud computing exposure also highlights the importance of the company’s diversification from its e-commerce business. Online store sales actually dipped from last year’s pandemic-fueled gains, but Amazon’s cloud computing and advertising businesses helped make up the difference and more.

“Amazon has evolved into a true platform, as more than 50% of its revenue now comes from areas outside of first-party retailing, such as cloud computing and advertising,” Deren Baker, chief executive officer of market research firm Edge by Ascential, told Bloomberg

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