Friday's ETF to Watch: Consumer Discretionary ETF (VCR)

Domestic markets have hit their fair share of turbulence this year and are now having trouble maintaining a steady growth pattern heading into the fall. Many had hoped that the economy would be well on its way to recovery by this point in the year, but the future still has a hazy outlook as unemployment levels remain dangerously high. But September has turned some heads, as markets may finally be trending upwards, as evidenced by the early September surge in equities. Though markets may appear to be making a turnaround, they are still quite volatile, hinging on news like central bank meetings or government data releases [see also Why Frontier Market ETFs Are Not as Risky as You Might Think].

This trend looks likely to continue today as the University of Michigan releases its consumer confidence report for the month of September. This report is valued as one of the most important indicators of the U.S. consumer segment, thanks to its quick turnaround and widespread data pool. The report takes into account personal finances, business conditions, and the purchasing power of individuals based on a large number of telephone surveys. Last month, the confidence level sat at 68.9, while this report is expected to see the figure rise modestly up to 70 [see also Retail ETFs Slaughtered By Weak Data].

A higher consumer confidence would be great news for equity markets. A strong result suggests that consumer buying power, as well as spending, is likely to increase, which could nudge the overall economy in the right direction. But if the report does not come in as expected, it could mean disaster for markets. A low consumer confidence level would point to falling wages and consumer spending alike. With investors, traders, and retailers all closely watching the release of this report, a negative result will create a blow-back for markets to finish out the week [see also Are Toilet Paper Sales Signaling a Strong Recovery?].

With all eyes on the data from this esteemed university, the Vanguard Consumer Discretion ETF (NYSE: VCR  ) should be active in Friday trading. The fund consists of U.S. companies of all sizes that fall into the consumer discretionary sector. Top holdings in the ETF include McDonald's (NYSEL MCD), Home Depot (NYSE: HD  ) , Amazon.com, and Lowe's. With over 375 holdings, VCR has turned in a strong performance this year, gaining more than 10% [see all of VCR's fundamentals here]. With many of the holdings of this ETF being companies that rely directly on consumer spending power, it will be particularly impacted by this report in trading today. A strong or as expected report will likely boost the fund, as it will paint a positive future for its holdings. But if the report comes in light, look for VCR to take a hit on the day.

[For more ETF insights, sign up for our free ETF newsletter]

More from ETFdb.com:

Disclosure: No positions at time of writing.

ETF Database is not an investment advisor, and any content published by ETF Database does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. From time to time, issuers of exchange-traded products mentioned herein may place paid advertisements with ETF Database. All content on ETF Database is produced independently of any advertising relationships. Read the full disclaimer here.

Home Depot and Lowe's Companies are Motley Fool Inside Value recommendations. Amazon.com is a Motley Fool Stock Advisor pick. The Fool owns shares of Lowe's Companies. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1304159, ~/Articles/ArticleHandler.aspx, 9/23/2014 4:48:16 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement