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CNBC
22-07-2025
- Business
- CNBC
During earnings season, two ETFs may signal how bullish investors feel about U.S. economy and consumer
Concerns about the consumer are still running high on Wall Street, even after the market's big comeback to a new record from the tariff-triggered downturn of April. While the worst fears about Trump's trade policies and inflation have not come to pass, Goldman Sachs is among Wall Street firms expecting a growth slowdown and a more cautious consumer ahead. As earnings season picks up, one simple market gauge on how bullish or bearish investors are on the consumer can be found in the performance of consumer discretionary and consumer staples ETFs. As Todd Sohn, senior ETF and technical analyst at Strategas Asset Management explained it on a recent CNBC "ETF Edge" podcast, "If discretionary is outperforming, that means auto, retails, homebuilders, are working against toothpaste and toilet paper. Adversely, if the staples are outperforming, that means the market does not like the earnings and would suggest a more defensive tone," said. Into earnings season, consumer discretionary ETFs have outperformed consumer staples. Over the past month, top consumer discretionary ETFs have outperformed consumer staples funds, such as the First Trust Consumer Discretionary AlphaDEX ETF (FXD ) and Fidelity MSCI Consumer Discretionary Index ETF (FDIS ). Looking at the oldest and broadest consumer funds in the ETF space, within the Select Sector SPDR family that tracks all of the major sectors within the S&P 500 on a stand-alone basis, there's been a reversal in performance of late. The Consumer Staples Select Sector SPDR (XLP ) is up 4% this year but only 1% in the past month. The Consumer Discretionary Select Sector SPDR (XLY ), meanwhile, is up over 5% during the past month while trailing staples year-to-date. The recent outperformance of discretionary continued through the first week of earnings season. Some of the top consumer staples ETFs in recent trading, meanwhile, have been narrower in focus, such Invesco's small-cap consumer staples ETF (PSCC ) and the Invesco's equal-weighted S&P 500 consumer staples portfolio (RSPS ) which stands out from the market-weighted XLP.
Yahoo
05-03-2025
- Business
- Yahoo
Strategist explains why there's a 'good setup' for healthcare stocks
Investors have been hesitant to invest in healthcare stocks (XLV) as the sector's returns have lagged behind gains in the broader market. But the market may begin to favor healthcare again, according to one strategist. 'I think there's a good setup of data to start adding healthcare to your portfolio,' Strategas Asset Management ETF strategist Todd Sohn said on an episode of the Stocks in Translation podcast (see video above or listen below) that aired on Feb. 11. He emphasized diversification in healthcare ETFs, 'so you're going to get providers, you're going to get equipment and biotech.' This embedded content is not available in your region. Sohn acknowledged that 'it's been a rough go for healthcare' as of late. The healthcare sector placed in the bottom decile of S&P sector performance in the past five years, he noted. While that may make healthcare stocks seem like a less-than-lucrative investment option, Sohn argued they're due for better performance — especially considering the recent sell-offs in tech. 'Usually when you get extremes like that, that's interesting, and there's been massive amounts of outflows from healthcare ETFs,' Sohn said. 'So that tells me investors have left the [healthcare] space — they've deserted it. From a sentiment and a contrarian perspective, I like that idea. Especially if tech starts to falter here a little bit more too.' Should investors ease up on their investments in the tech space, according to Sohn, healthcare could be a potential hedge for investors. 'There's a trade-off because healthcare does have those growth and value characteristics that you'll get from technology as well,' he said. 'If you were to get software to take a hit, that leaves broader tech in trouble,' Sohn said. 'So that's where healthcare comes into play because it's still a large weight. Or, say, something like Industrials and [Consumer] Discretionary — those will still at least hold up the benchmarks.' Though tech, AI, and crypto have been catalysts for stocks' recent highs, Sohn isn't the first expert to caution that the trends may shift to favor other markets. 'I think the main takeaway is the trend of the market is still up, but things are evolving,' he said. 'Now the question [is] if the broader industry is going to make a new high, is participation still there? That's going to be the most important question heading into the rest of the first quarter and into the summer months because that's where durability is made or divergences are made too.' Sign in to access your portfolio
