Retail stock woes hit consumer sector ETFs as S&P 500 nears bear market territory ETF Wrap

By Christine Idzelis

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“Inflation always hits the lower income cohorts hardest and first,” according to a May 18 markets note from The Sevens Report. Walmart’s earnings results “imply that’s starting to happen now,” the report says, warning that “a further economic slowdown” risks weighing more broadly on the Consumer Discretionary Select Sector SPDR Fund.

The Sevens suggested that Walmart’s results “somewhat refutes the ‘defensive’ nature of consumer staples, at least partially,” while also pointing to the consumer shift that the retailer saw toward brand names instead of “private label” as a sign of inflation weighing on consumers.

Read: Walmart says consumers are trading down to private label for items like dairy and bacon

“The shift from brand names to generic is a potential threat” to Procter & Gamble Co. /zigman2/quotes/202894679/composite PG +0.27% , which is the biggest holding in the Consumer Staples Select Sector SPDR Fund (XLP), according to the Sevens Report. “We don’t think it invalidates Consumer Staples as a defensive play, but it does imply an equal-weight ETF might be better than XLP to diversify the risk a bit more.”

The Invesco S&P 500 Equal Weight Consumer Staples ETF “equal weights the consumer staples in the S&P 500, providing more diversification against changing consumer trends,” according to the report. Shares of the Invesco S&P 500 Equal Weight Consumer Staples ETF are down around 3% this year through Wednesday, FactSet data show.

As usual, here’s your weekly look at the top and bottom ETF performers over the past week through Wednesday, according to FactSet.

The good…

Best performers	%Performance
Invesco WilderHill Clean Energy ETF /zigman2/quotes/208932878/composite PBW	12
Invesco Solar ETF /zigman2/quotes/210041821/composite TAN	10.9
VanEck Rare Earth/Strategic Metals ETF /zigman2/quotes/205602686/composite REMX	9.8
ALPS Clean Energy ETF /zigman2/quotes/204291195/composite ACES	9.1
First Trust Nasdaq Clean Edge Green Energy Index Fund /zigman2/quotes/205893823/composite QCLN	8.5

…the bad

Worst Performers	%Performance
Xtrackers MSCI Kokusai Equity ETF /zigman2/quotes/217833551/composite KOKU	-7.7
Vanguard Consumer Staples ETF /zigman2/quotes/204569793/composite VDC	-5.4
Invesco S&P 500 Equal Weight Consumer Staples ETF	-5.3
Consumer Staples Select Sector SPDR Fund /zigman2/quotes/200697959/composite XLP	-5.2
Fidelity Covington Trust MSCI Consumer Staples Index ETF /zigman2/quotes/209917699/composite FSTA	-5.2

Source: FactSet, through Wednesday May 18, 2022 excluding ETNs and leveraged products. Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greater

A couple ETF launches:

Simplify Asset Management said May 17 that it was launching the Simplify Macro Strategy ETF /zigman2/quotes/206731082/composite FIG +0.28% , a fund that aims for “equity-like returns with lower volatility” by investing in equity, fixed income, alternative ETFs and derivatives.

Teucrium Trading announced May 17 that the Teucrium Agricultural Strategy No K-1 ETF /zigman2/quotes/235444905/composite TILL -0.12% would begin trading on the New York Stock Exchange. The actively managed fund provides futures price exposure to corn, wheat, soybean and sugar markets using a “long only” strategy.