This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Are Consumer ETFs Going the Way of the VCR?

Stocks in this article: XRT XLY VCR XLP RCD SPY

NEW YORK (ETF Expert) -- One of the most commonly cited facts about the U.S. economy is that consumers represent two-thirds or more of GDP growth. Put another way, if Americans are spending, the economy expands. If we rein in our consumption, however, the economy expands at a slower pace and/or contracts.

On Thursday, newswires trumpeted that GDP expanded at a pace of 3.7% between the beginning of July and the end of December. Not only did the economy accelerate in the second half of 2013 -- the first half growth came in at an anemic 1.8% -- but 3.7% marked the strongest second-half growth in ten years. With a government shutdown? With higher interest rates? Surely this demonstrates the remarkable resilience and durability of the American consumer.

On the other hand, there are plenty of conflicting data points regarding consumption. Pending home sales are at their lowest level in more than two years. Meanwhile, annualized wage growth averaged somewhere in the neighborhood of 1.75%-2.0% in 2013, well below the "norm" for personal income growth that is closer to 3.25%. Undoubtedly, many Americans have been feeling wealthier because of rising home prices and/or rising 401(k) values. Nevertheless, the absence of genuine income growth may eventually exact a heavy toll.

Now comes the biggest question of them all: Does any of this matter to the stock market or its key component sectors? Probably. For example, retailers have put forward some of the weakest earnings reports, revenue numbers and forward guidance of any sub-segment. It follows that SPDR S&P Retail (XRT) has been one of the ugliest year-to-date investments with regard to its percentage losses as well as its dip below a long-term 200-day trendline.

Right now popular consumer investments like SPDR Sector Select Consumer Discretionary (XLY) and Vanguard Consumer Discretionary (VCR) may appear like "buy-the-dip" winners. Still, one has to wonder if we may be witnessing a last hurrah for stocks tied to household consumption.

How Troubling Is The Undeperformance Of Consumer-Oriented ETFs?
            YTD Through 1/29
SPDR Sector Select Consumer Staples (XLP)   -4.9%
SPDR Sector Select Consumer Discret (XLY)   -6.2%
Vanguard Consumer Discretionary (VCR)     -6.2%
Rydex Equal Weight Consumer Disc (RCD)   -6.8%
SPDR S&P Retail (XRT)       -9.7%
S&P 500 SPDR Trust (SPY)       -4.0%

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs