Invesco's Leisure & Entertainment ETF Lifted as Hospitality Stocks Rally

Hospitality companies are among the biggest gainers during the broad market rally on Wednesday.

The Invesco Dynamic Leisure & Entertainment ETF (PEJ) is up over 2.1% on Wednesday, lifted by hospitality names including United Airlines Holdings Inc (UAL), up 6.1%, and Alaska Air Group Inc (ALK), up 5.7%. 

Stocks broadly were higher on Wednesday after President Joe Biden and congressional leaders expressed optimism about debt ceiling negotiations. Biden said he’s confident a default will be avoided, and McCarthy said it is possible to get a deal by the end of the week.

PEJ has remained well positioned this year as consumers have remained strong, maintaining purchasing power, despite the Fed’s interest rate increases. Earlier this year, data from TSA showed flight check ins in the U.S. that were at — if not above — pre-pandemic levels, suggesting the reopening trade is still a lucrative opportunity.

See more: As Consumers Remain Resilient, Look to PEJ

PEJ has outpaced broader markets year to date, up 10.8% compared to the 7.7% climb from the S&P 500.

Invesco Dynamic Leisure & Entertainment ETF Performance 

Under the Hood of the Invesco Invesco Dynamic Leisure & Entertainment ETF

PEJ comprises 30 U.S. leisure and entertainment companies. These are companies that are principally engaged in the design, production, or distribution of goods or services in the leisure and entertainment industries.

According to Rene Reyna, head of thematic and specialty product strategy for Invesco, the companies included in PEJ tend to have clients that are businesses or higher-end consumers. The higher-end client base generally means they are more insulated from inflation and rising interest rates.

Top holdings by weight as of May 17 include Booking Holdings Inc. (BKNG), Live Nation Entertainment Inc. (LYV),Yum! Brands Inc. (YUM), Las Vegas Sands Corp. (LVS), and Yum China Holdings Inc. (YUMC).

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