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ETFs for Friday's Consumer Data


Depending on how today's consumer data numbers look, here are some ETFs that you can play the market with.


Friday isn't just the last day of the week, month, and first quarter. The last day of March, usually a down day for US equities, brings consumer spending news from the Commerce Department. Purchases rose 0.6%, the most in five months, after a 0.2% gain in January, according to the median estimate of 83 economists surveyed by Bloomberg News.

Economists are expecting a 0.4% increase in incomes, but the consumer confidence data for March is expected to have dipped to 74.5 from 75.3 the previous month, marking the first decline since August 2011, Bloomberg reported.

With the way stocks have been acting in the back half of March, it would be constructive if today's consumer data surprised to the upside, giving the bulls more ammunition to push the market higher. If the surprises are of the negative variety, well, then we know what happens next. Either way, these ETFs will be in play.

1. SPDR S&P Homebuilders ETF (XHB) Federal Reserve Chairman Ben Bernanke has previously said that slack consumer spending hurt the housing market, so it can be inferred that strong consumer data can lead to strong housing data. Or maybe housing data leads and the consumer follows? Pondering the merits of that chicken/egg argument is one thing, but what's really important is knowing that XHB is a useful ETF for myriad reasons.

Not only is XHB heavy on homebuilders, but it also features allocations to stocks such as Bed Bath & Beyond (BBBY) and Williams-Sonoma (WSM), making the ETF a play on all things home. The retail exposure is heavy enough in XHB that it could get a lift from Friday's economic reports.

2. SPDR S&P Retail ETF (XRT) The SPDR S&P Retail ETF has shown plenty of moxie lately. The broader market has not thrilled in the past week, but XRT is higher. With one trading day left in March, XRT has doubled the returns offered by the SPDR S&P 500 (SPY) this month. Now the freight train that is XRT is just 2% removed from its 52-week high.

The 30% allocation to apparel retailers is pivotal as it pertains to Friday's consumer data. Good news from consumers could bode well for almost a third of XRT's weight. It's that simple. XRT is being supported by its 20-day moving average. A deeper pull back could result in a drop of almost 5%.

3. First Trust Consumer Discretionary AlphaDEX Fund (FXD) The First Trust Consumer Discretionary AlphaDEX Fund doesn't get the attention that the Consumer Discretionary Select Sector SPDR (XLY) gets, but to FXD's credit, it has slightly outperformed its larger rival year-to-date. Still, with almost $583 million in assets under management, FXD is a lot bigger than some realize.

Home to almost 130 stocks, FXD uses a multifactor model to weight its constituents, not the usual cap-weighted methodology. That helps explain some of the performance difference between FXD and rival funds, but FXD, XLY, and practically any other ETF with "discretionary" in its name can be moved by consumer data.

Editor's Note: This content was originally published on by The ETF Professor.

Below, find some more great ETF and market content from Benzinga:

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Twitter: @Benzinga

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No positions in stocks mentioned.

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