Consumer Stocks Gain As Oil Falls – Weekly ETF Fund Flows
As the calendar flipped to a new year last week, ETF fund flows were mixed as bullish investor sentiment gave way to fear.
The leading story for the financial markets continues to be oil prices. The price of WTIC crude oil ended the week under $53.00 per barrel. That’s 50% lower than it was in June.
Amazingly, US consumers are expected to save $150 billion on gasoline this year if oil prices stay below $60 per barrel.
As a result, investors are flocking to the Consumer Discretionary Select Sector SPDR (XLY). XLY had net inflows of $1.7 billion last week.
Needless to say, investors are expecting the companies in this ETF to benefit from the extra money in consumers’ pockets thanks to the $150 billion in savings at the pump.
Another sector ETF that enjoyed a strong net inflow was the iShares US Utilities (IDU). IDU collected $1.2 billion in net inflows last week.
Clearly, investors are using ETFs to position themselves to benefit from better performance in specific sectors of the US economy.
At the same time, there were large net outflows from the iShares Short Treasury Bond (SHV) and the SPDR S&P 500 (SPY). SHV had net outflows of $2.2 billion while SPY lost $2.1 billion.
In other words, investors reduced their exposure to US large cap stocks at the same time they reduced their bearish bets on US Treasuries. That’s clearly sending mixed messages about the overall sentiment of investors.
According to the American Association of Individual Investors Sentiment Survey, bullish sentiment ticked up to 51.7% last week. That’s well above the long-term average of 38.9%. A clear indication that investors are still bullish on US stocks.
Despite the strong level of bullishness, fear seems to be the dominant emotion driving investors’ actions right now.
The selloff in the S&P 500 over the last few days has pushed indicators of market momentum, volatility, as well as the number of stocks making new highs and new lows to levels that indicate fear in the market.
Here’s the bottom line…
The ETF fund flows indicate that investors are increasingly bullish on a smaller group of stocks… mostly the consumer stocks that should get a direct benefit from the drop in oil prices.
But outside of those pockets of strength, investors are becoming increasingly fearful that the dramatic decline in oil prices will have ripple effects for the global economy.
Good Investing,
Corey Williams
Category: ETFs, Market Analysis
