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Consumer ETFs Worth Watching

NEW YORK (TheStreet) -- Over the past few weeks, investor confidence in the United States has been pestered relentlessly by the macroeconomic drama facing regions like the European Union and China. These crises have taken their toll on various corners of the marketplace, but one area that has managed to hold up relatively well throughout these tumultuous weeks has been the consumer.

The discretionary corner of the consumer sector has seen particularly impressive action; over the most recent one-month period, the Consumer Discretionary Select Sector SPDR (XLY) has managed to maintain its footing in positive territory, even as most other SPDR sector funds linked to cyclical market segments have slid to losses.

Given this recent show of resilience and the earnings calendar for the week ahead, funds designed to target top U.S. consumer destinations will likely be some of the more interesting products to watch. I encourage investors to wait until the festivities subside; but in the event that the earnings action goes smoothly, some of these products may even prove to be attractive options for those looking for a welcomed respite from the market's global macroeconomic challenges.

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Consumer ETFs have been forced to prove themselves throughout the opening months of 2012. They have managed to carve out leadership roles in recent weeks, but since the start of the year, the mood toward XLY and the Consumer Staples Select Sector SPDR (XLP) has been under pressure. Whereas they stood up as beacons of stability during the choppy second half of 2011, a weak spate of economic data seen at the start of the year led some to question whether the ride was over for the consumer.

These fears have proven to be short lived, however, and in recent weeks, the data have pointed to signs of strength. As a whole, last week's batch of economic news was lackluster at best.

One clear point of optimism, however, came last Monday, when investors learned that retail sales in March jumped 0.8%. In addition to beating analysts' estimates, this marked the second consecutive month of increases.

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While the data have indicated a turnaround, high energy prices have remained a persistent challenge. Fortunately, even added pressure at the pump has failed to stem consumer buying habits or derail the sector. While worth monitoring, investors looking to the near term should avoid letting fuel prices dissuade them from venturing into this relatively strong market corner.
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