With inflation concerns continuing to linger in the background, markets have pulled back slightly from their upward momentum with the CPI shock last week. This week brings the retail side into focus with big box retailers such as Walmart and Home Depot reporting their earnings in what should be a barometer of consumer sentiment.
The Census Bureau will report October’s retail sales on Tuesday, according to CNBC, and while it is anticipated that retail sales will be up in October, consumer concerns regarding inflation continue to mount. A consumer sentiment index from the University of Michigan was at a 10-year low for November, at 66.8 compared to 71.7 in October.
“It’s so important to look at what consumers do, versus what they say,” said National Securities chief market strategist Art Hogan. “The trend that we’re looking for in the next week is sequential improvement in economic data. That’s the important thing to focus on.”
Retail sales are anticipated to have risen 1.1% in October versus the 0.7% growth in September, and analysts will be watching closely as major retailers such as Walmart and Home Depot report their earnings.
“Walmart is a pretty big barometer for the health of the consumer for sure, and it will be interesting to see how they handle margins,” said Hogan. The inflation pressures have caused many companies to raise prices already, passing those increasing costs along to the consumer.
Investing in a Variety of Major Market Movers With USMC
The Principal U.S. Mega-Cap ETF (USMC) invests in major market movers such as Walmart and offers exposure to the biggest companies within their industries.
USMC tracks the Nasdaq US Mega Cap Select Leaders Index, a modified equal-weighted index.
The smart beta index takes the top half of securities on the Nasdaq US 500 Large Cap Index and divides the top 10% of companies by market value from the bottom 90%. The top 10% of companies are weighted by market value, while the bottom 90% are equal-weighted and tilted toward those firms with less volatility.
The index is rebalanced semi-annually, though securities that become ineligible for the index between balancing periods are removed without being replaced.
As a smart beta ETF, USMC’s benchmark seeks to provide optimal outcomes on downturns and to capitalize on surges while minimizing exposure to volatility.
USMC is currently comprised of 47 holdings, and major holdings include a diversity of sectors; the fund has a 26.29% allocation to technology, 20.47% to healthcare, 15.71% to communication services, 15.29% to consumer defensive, and smaller holdings in several other sectors, as of November 8.
Walmart (WMT) is carried at a 3.22% weight within the fund.
The ETF carries an expense ratio of 0.12%.
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