The SPDR S&P Retail ETF (NYSEArca: XRT), the largest retail exchange traded fund, is up about 1% year-to-date although the fund was recently hampered by an earnings miss by Dow component Wal-Mart Inc. (NYSE:WMT). Some market observers believe XRT is poised to climb in the weeks ahead.
A broader group of consumers are adding to improved retail sales this year, compared to 2016 when spending was driven by high-income shoppers. The improved jobs market and rising wages may have helped drive the broader consumer spending spree, analysts and economists said.
“XRT touched a two-year high of $49.08 on Jan. 24, before pulling back with the broader stock market. However, the exchange-traded fund (ETF) found support atop its 80-day moving average, in the vicinity of a 50% Fibonacci retracement of its rally from November lows to the aforementioned peak. Shares of the fund closed yesterday at $45.34, and are on the cusp of a historically bullish time of year,” reports Schaeffer’s Investment Research.
However, XRT faces competition from ETFs that are more levered to the boom in e-commerce. The trend away from traditional department stores and apparel retailers to online shopping destinations should benefit the Amplify Online Retail ETF (NasdaqGM: IBUY), which is comprised of global companies that generate at least 70% of revenue from online or virtual sales.
On the other hand, historical data confirm that XRT is worth considering with March right around the corner.