ETFs
5 Sector ETFs and Stocks That Will Benefit from May Inflation Report
The annual inflation rate in the United States slowed to 3.3% in May 2024, the lowest in three months, from 3.4% in April and forecasts of 3.4%. The core CPI, which excludes changes in food and energy prices, came in at 3.4%, below expectations of 3.5%. This is the lowest rate since April 2021.
Compared to the previous month, the CPI remained unchanged, at the least since July 2022, compared to forecasts for an increase of 0.1% and after an increase of 0.3% in April. The monthly core inflation rate also fell to 0.2% from 0.3%, better than forecasts of 0.3%.
Prices of basic consumer goods like gasoline and groceries have fallen. Housing inflation remains stubbornly high, although slowly declining. Against this backdrop, below we highlight a few sector ETFs that could gain in the near term.
Sector ETFs to win
Real Estate – Real Estate Select Sector SPDR ETF (XLRE)
Weighted housing represents 32.77% of the CPI, including 7.8% rent and 23.68% private housing, according to MacroMicro data. The housing index jumped 0.4% in May sequentially and grew 5.4% annually.
The underlying Real Estate Select Sector Index includes securities of companies in the following sectors, real estate management and development and REITs, excluding mortgage REITs. The fund earns 3.51% per year and charges 9 basis points in fees.
In the meantime, American tour AMT, has a Zacks Rank #2 (Buy). It is a leading independent operator of wireless communications towers.
Medical Care Products – iShares US Medical Devices ETF (IHI)
The medical care products index rose 1.3% sequentially in May. The index increased by 3.1% per year. The index increased by 0.4% sequentially in April, indicating strong upward price momentum.
The Dow Jones US Select Medical Equipment Underlying Index measures the performance of the medical equipment sector of the US stock market.
Masimo MASI, which has a Zacks Rank #1 (Strong Buy) deserves a mention. It develops, manufactures and markets a family of non-invasive monitoring systems.
Restaurants – AdvisorShares Restaurant ETF (EATZ)
The out-of-range food index jumped 0.4% in May and 0.3% in April. The price index increased by 4.0% annually in May.
The AdvisorShares Restaurant ETF is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenues from the industry of catering.
CAVA Group inc. CAVA, which has a Zacks Rank #2, is a category-defining Mediterranean fast-casual restaurant brand.
Electric Utilities – AdvisorShares Restaurant ETF (EATZ)
The electricity index remained stable in May sequentially, but it increased by 5.9% annually in May.
The story continues
The underlying Utilities Select Sector Index seeks to provide an effective representation of the utilities sector of the S&P 500 Index. The fund charges 9 basis points in fees and earns 3.09% per year.
CentrePoint Energy CNP, which has a Zacks Rank #2, is a national energy delivery company providing electricity transmission and distribution, power generation and natural gas distribution operations to more than 7 million metered customers in six states: Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas.
Transportation – SPDR S&P Transportation ETF (XTN)
Although the transportation index fell 0.5% sequentially in May, it rose 10.5% year-on-year.
The XTN fund tracks the S&P Transportation Select Industry Index, which represents the transportation segment of the S&P Total Market Index. The fund has a Zacks Rank #2.
When it comes to big stocks, Zacks Rank #3 (Hold) FedEx FDX can be read. It is the leader in global express delivery services. The Company offers a broad portfolio of transportation, e-commerce and business services through collectively competing, independently operating and collaboratively managed companies under the FedEx brand.
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American Tower Corporation (AMT): Free Stock Analysis Report
CenterPoint Energy, Inc. (CNP): Free Stock Analysis Report
Masimo Corporation (MASI): Free Stock Analysis Report
FedEx Corporation (FDX): Free Stock Analysis Report
SPDR S&P Transportation ETF (XTN): ETF Research Reports
SPDR Real Estate Select Sector ETF (XLRE): ETF Research Reports
iShares US Medical Devices ETF (IHI): ETF Research Reports
ETF AdvisorShares Restaurant (EATZ): ETF Research Reports
CAVA Group, Inc. (CAVA): Free Stock Analysis Report