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Consumer Discretionary Select Sector SPDR Fund ETF (XLY), which tracks S&P 500 consumer discretionary sector (SP500-25), registered a subdued growth in Q1 after rallying 38% in 2023. XLY was up 3.1% in the quarter, lagging the broader S&P 500 index gain of 10%.
Industries Q1 performance
Within discretionary, home-building and automotive continued to struggle. The Automobiles & Components industry declined 21.8% YTD, Retailing industry added 15.8%, Consumer Services gained 4.7%, while Consumer Durables & Apparel fell about 2.6%.
Net outflow in Q1
The XLY fund (XLY) saw a negative net outflow of ~$31.19M during the past three months.
Top consumer discretionary gainers in Q1:
- Deckers Outdoor (DECK) +37%
- Ralph Lauren (RL) +29%
- Chipotle Mexican Grill (CMG) +27%
- Tapestry (TPR) +26%
- Mohawk Industries (MHK) +26%
Top consumer discretionary decliners in Q1:
- Tesla (TSLA) -33%
- Lululemon Athletica (LULU) -23%
- V.F. Corp (VFC) -18%
- Etsy (ETSY) -16%
- NIKE (NKE) -13%
What Analysts Expect
SA Analyst Uttam Dey has a neutral view as he expects limited upside in the short term as the long-term trends remain intact along with seasonal headwinds.
Consumer discretionary distribution and retail measured the highest dispersion on a percentile basis at 85% relative to history.
Morgan Stanley analysts monitored the dispersion metrics of the S&P 500 and its sectors and subsectors on a percentile basis relative to history. Dispersion levels, strategist Michael J. Wilson wrote in a U.S. Equity Strategy note, “have come down closer to median levels after being elevated for most of 2022.”
The Consumer discretionary sector (XLY) had the largest net selling in almost two months, according to an Insights and Analytics report by Goldman Sachs’ Prime Brokerage team.
Goldman Sachs’ Prime Book still is overweight on the consumer discretionary sector compared to the S&P 500 by 6.7%, which is in the 96th percentile, compared to the past year, and in the 90th percentile compared to the past five years, the report said.
What Quantitative Measures Say
Seeking Alpha’s Quant Rating system gives Consumer Discretionary Select Sector SPDR Fund ETF (XLY) a Hold rating, with a 3.18 score.
The ETF has a strong liquidity grade of A+ and momentum grade of B. Notably, the ratings system sees risk as a threat and assigns the ETF a grade of C- in this category.