Consumer Confidence Surges in May: ETFs to Gain
The primary driver of the surge was the progress in U.S.-China trade negotiations. President Donald Trump's decision on May 12 to halt severe tariffs appears to have reassured consumers. The May uptick follows five consecutive months of declining consumer confidence, a trend fueled by the escalating trade war initiated by President Trump. China was a key focus of U.S. tariff actions until both sides reached a temporary truce in early May.
Other components of the survey also showed improvement. The Present Situation Index climbed to 135.9, up 4.8 points. The Expectations Index surged to 72.8, an increase of 17.4 points. Investor sentiment improved as well, with 44% now expecting stock prices to rise over the next 12 months, compared to 37.6% in April.
Perceptions of the labor market also improved: about 19.2% of respondents expect more job availability in the next six months (up from 13.9%). Those expecting fewer jobs fell to 26.6% (from 32.4%). A slightly increased 31.8% said jobs are 'plentiful.'
Against this backdrop, both consumer discretionary and staples-based exchange-traded funds (ETFs) should benefit. These ETFs include Consumer Discretionary Select Sector SPDR Fund XLY, Vanguard Consumer Discretionary ETF VCR, Fidelity MSCI Consumer Discretionary Index ETF FDIS, SPDR S&P Retail ETF XRT, Consumer Staples Select Sector SPDR Fund XLP, iShares U.S. Consumer Discretionary ETF IYC and iShares U.S. Consumer Staples ETF IYK.
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Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
SPDR S&P Retail ETF (XRT): ETF Research Reports
Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports
Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports
iShares U.S. Consumer Staples ETF (IYK): ETF Research Reports
Fidelity MSCI Consumer Discretionary Index ETF (FDIS): ETF Research Reports
iShares U.S. Consumer Discretionary ETF (IYC): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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