As the buying bonanza typical of the holiday shopping season approaches, the strong consumer confidence in the U.S. economy could help bolster consumer sector-related ETFs.
According to the Conference Board, U.S. consumer confidence rose to an 18-year high of 137.9 in October on optimism over jobs and the economy, Bloomberg reports. The strong job market could support household confidence, along with Americans’ purchases in the upcoming holiday season.
“Consumers’ assessment of present-day conditions remains quite positive, primarily due to strong employment growth,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement. The expectations gauge indicates “that consumers do not foresee the economy losing steam anytime soon. Rather, they expect the strong pace of growth to carry over into early 2019.”
Additionally, according to Johnson Redbook, U.S. retail sales at comparable stores rose 5.9% in the week ended Oct. 27 year-over-year, with sales expected to be 6.3% higher for the full month.
Consumer sector-related ETF Plays
Investors who believe that the optimism among U.S. consumers could translate to improved sales in during the upcoming holiday season can look to consumer sector-related ETFs. For example, one can look to broad consumer discretionary exposure through something like the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY), Vanguard Consumer Discretionary (NYSEArca: VCR) and Fidelity MSCI Consumer Discretionary Index (NYSEArca: FDIS).
For more focused exposure on the retail space, investors can use the SPDR S&P Retail ETF (NYSEArca: XRT) and the VanEck Vectors Retail ETF (NYSEArca: RTH) to access large retail stores.
Alternatively, given the rising importance of online retail or e-commerce in a digital age, the Amplify Online Retail ETF (NasdaqGM: IBUY) and ProShares Online Retail ETF (NYSEArca: ONLN) provide exposure to online retail outlets.
For more information on the consumer sector, visit our consumer discretionary category.