Key Points
Thanksgiving saw a whopping $38 billion in online spending, signaling a resilient consumer base amid economic uncertainties.
A notable 7.8% increase in Cyber Week spending has renewed optimism for the retail sector.
The SPDR S&P 500 Retail ETF (XRT) has reflected this optimism, with a 10% surge last month and a 2% rise this week.
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The retail sector experienced a robust start to the holiday shopping season as U.S. shoppers were enticed by substantial discounts across various categories, resulting in $38 billion in online spending over the Thanksgiving weekend.
Despite prevailing economic uncertainties, this surge in spending, which saw a notable 7.8% increase during Cyber Week compared to initial projections of 5.4%, indicates a strong consumer appetite and sets a promising tone for the upcoming shopping period.
That robust start and optimism have made themselves ever-present in the popular retail sector ETF, the SPDR S&P 500 Retail ETF NYSE: XRT, up over 10% last month and almost 2% on the week.
As optimism grows and the sector breaks above notable resistance and key moving averages, it’s worth taking a closer at the XRT.
What is the XRT?
The SPDR S&P Retail ETF aims to mirror the S&P Retail Select Industry Index’s performance, an equally weighted market cap index representing the retail sub-industry within the S&P Total Market Index. The ETF invests in various retail sectors, including apparel, automotive, food, department stores, online retail, general merchandise, drug retail, hypermarkets, and supercenters.
The ETF has $484 million in assets under management and offers a dividend yield of 2.01% and a net expense ratio of 0.35%. Its holdings’ geographic exposure is predominantly in the United States, with a 98.5% exposure to the region. Regarding sector exposure, the ETF is mainly exposed to the Consumer Discretionary sector, with a 67% exposure.
The XRT holds a Hold aggregate rating based on evaluations from 697 analysts covering around 71.3% of its portfolio across 50 companies. Looking at its price target, XRT sits at $72.61, suggesting a potential upside of 12.40%. Analysts’ predictions span from $48.93 to $97.55, considering the range of evaluations within the portfolio’s 50 companies.
The recent performance of top holdings of the ETF
Its second top holding is Signet Jewelers NYSE: SIG, with a 1.65% weighting. Like CVNA, the stock is up almost 18% over the previous month and is trading near a critical resistance level. All eyes will be on the resistance level of $83 going forward. If the stock can break through this level with authority, it could extend its recent gains, impacting the overall sector’s performance and optimism.
Kohl’s NYSE: KSS is the ETF’s third-largest holding, with a weighting of 1.62%. Year-to-date, the stock has underperformed. However, it has recently put in a double bottom, bouncing off support near $18. Up almost 5% last month, it will be essential to note whether the stock can place a higher low in the upper portion of its recent move, which could signal price stability and a bigger picture momentum shift for the stock and sector.
For now, optimism has returned to the sector
During Thanksgiving, the retail sector surged with a $38 billion online spending spree, showcasing a resilient consumer base amidst economic uncertainties. This 7.8% increase in Cyber Week spending has reignited optimism for the sector, exemplified by the XRT ETF experiencing positive flows this last month and rising 10% and 2% so far this week. Notably, key holdings like Carvana, Signet Jewelers, and Kohl’s have contributed positively, possibly suggesting that the sector is poised to continue its momentum into the holiday season.Before you consider Signet Jewelers, you’ll want to hear this.MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Signet Jewelers wasn’t on the list.While Signet Jewelers currently has a “Hold” rating among analysts, top-rated analysts believe these five stocks are better buys.View The Five Stocks Here If a company’s CEO, COO, and CFO were all selling shares of their stock, would you want to know?Get This Free Report
