Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

US Retail Sales Fall For 3 Straight Months: ETFs In Focus

Published 03/15/2018, 02:30 AM
Updated 07/09/2023, 06:31 AM

U.S. retail sales declined for the third straight month in February, as consumers cut back on purchases of motor vehicles and other expensive items, indicating a potential drop in GDP in the first quarter. Out of the 13 major sectors, seven reported declines (read: Will Wall Street Hit the Brakes in 2019? ETFs to Play).

Retail sales data is going to play along with the market’s expectations of the previously expected three rate hikes in 2018, after muted inflation data reported earlier this week alleviated fears of more aggressive rate hikes by the Fed. Consumer prices increased 2.2% year over year in February, up from 2.1% reported in the previous month.

Into the Headlines

Overall retail sales declined 0.1% in February compared with expectations of a gain of 0.3% after 0.1% drop in the prior month and December. This was the first time since April 2012 that retail sales have declined for three consecutive months. Excluding automobiles, gasoline, building materials and food services, core retail sales increased 0.1% in February after staying unchanged in January. Core retail sales are most closely aligned with the consumer spending component of GDP (read: 3 ETFs to Benefit as Faster Rate Hike Worries Cool Down).

Consumer spending accounts for over two-thirds of the United States’ GDP and seems to have slowed in 2018. It grew 3.8% year over year in the fourth quarter of 2017 but tepid wage growth in February might have dented purchasing power. Average hourly earnings in the United States inched up 0.1% in February compared with 0.3% in the previous month.

In February, auto sales declined 0.9%, after a similar drop in January, and receipts at gasoline stations declined 1.2%. However, sales at building material stores increased 1.9% in the month while receipts at clothing stores gained 0.4% and sales at online retailers rose 1.0%.

Let us now discuss a few ETFs focused on providing exposure to the sectors impacted.

First Trust NASDAQ Global Auto Index Fund CARZ

This fund focuses on providing exposure to the global automotive sector. A drop in auto sales in February might impact this ETF. It has AUM of $20.9 million and charges a fee of 70 basis points a year. The fund has a 20.0% allocation to the United States. It has an allocation of 8.3% to Toyota, 8.2% to Honda and 8.1% to Daimler AG (DE:DAIGn). The fund has returned 16.5% in a year. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

PowerShares Dynamic Building & Construction Portfolio PKB

This fund is a popular ETF focused on providing exposure to the U.S. building and materials construction sector. Strength in building material stores might lead to gains in this ETF.

It has AUM of $317.5 billion and charges a fee of 63 basis points a year. The fund’s top three holdings are AAON Inc (NASDAQ:AAON) , PulteGroup Inc (NYSE:PHM) and Lennar Corp (NYSE:LEN) , with 5.6%, 5.2% and 5.2% allocation, respectively. The fund has returned 8.9% in a year. It has a Zacks ETF Rank #3 with a High risk outlook.

United States Gasoline Fund UGA

This fund focuses on providing exposure to a widely used commodity, gasoline. Weakness in gasoline receipts might negatively impact this ETF. It has AUM of $44.8 million and charges a fee of 75 basis points a year. The fund has returned 19.9% in a year.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>







AAON, Inc. (AAON): Free Stock Analysis Report

PulteGroup, Inc. (PHM): Free Stock Analysis Report

Lennar Corporation (LEN): Free Stock Analysis Report

US GAS FUND LP (UGA): ETF Research Reports

PWRSH-DYN BLDG (PKB): ETF Research Reports

FT-NDQ GL AUTO (CARZ): ETF Research Reports

Original post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.