Strong Consumer Spending Isn't Enough for Retail ETFs | ETF Trends

Despite strong third quarter results that revealed improved consumer spending, retail and consumer discretionary sector-related exchange traded funds weakened Thursday.

On Thursday, the SPDR S&P Retail ETF (NYSEArca: XRT) fell 0.9% and the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) slipped 0.5%.

The Commerce Department revealed purchases of motor vehicles and building materials jumped on recovery efforts in the wake of Hurricane Florence, along with broad gains in sales ahead of the holiday shopping season, potentially foreshadowing a good quarter ahead, Reuters reports.

Additionally, the falling oil prices, which are expected to drag down gasoline prices, could also bolster sales as consumers are left with more discretionary money to spend.

“The consumer has the wind at their backs and with gasoline prices falling at the pump, we expect even more spending in the next couple of months,” Chris Rupkey, chief economist at MUFG, told Reuters.

Retail sales increased 0.8% last month, compared to average forecasts for a 0.5% rise in October.