Sector Round-Up | WSBE 621

Sector Performance

Percent Gain/Loss
May 1-May 27
S&P 500 Index 0.19%
Communication Services (XLC) 2.34%
Consumer Discretionary (XLY) -3.97%
Consumer Staples (XLP) 2.41%
Energy (XLE) 8.56%
Financials (XLF) 5.65%
Health Care (XLV) 0.35
Industrials (XLI) 1.78%
Materials (XLB) 4.49%
Real Estate (XLRE) 1.61%
Technology (XLK) -2.84%
Utilities (XLU) -2.01%

Source: SPDR Select ETFs

The consumer discretionary sector took the lead in April, providing confirmation to a report showing consumer spending was on the rise.

Our portfolio holds the Consumer Discret Select Sector SPDR ETF (XLY), giving investors an added boost beyond the consumer discretionary stocks they already own in the SPDR S&P 500 ETF (SPY).

The Commerce Department said the economy grew 1.6% in the first quarter. Consumer spending, which accounts for two-thirds of that growth, rose by 10.7% in the quarter. Consumer confidence rose to a 14-month high.

Analysts attribute the growth to warmer weather, a greater vaccination rate and stimulus checks. Americans are ready to get out and about, and start spending again. The consumer discretionary sector is a beneficiary.

Technology, which slumped between mid-February and early April, is once again in rally mode, with a one-month gain of 6.84%. The two largest components, Apple (AAPL) and Microsoft (MSFT) represent 21.99% and 20.03%, respectively, of sector weightings. Clearly, those two stocks control much of the sector’s fate.

Apple advanced 10.21% over the past month, while Microsoft notched a 7.65% total return. As long as these monster companies are marching higher, the sector will perform well.

Energy is still the biggest year-to-date winner, although it lagged in April. So far in 2021, the Energy Select Sector SPDR ETF (XLE) returned 32.22%. April has been another story, though, with a 0.63% decline. That’s barely a blip at this point. If the economy continues expanding, that should drive demand for energy.

There’s some concern about gas shortages during the summer travel season, due to a lack of tanker truck drivers to transport fuel. However, it remains to be seen how that actually plays out.

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