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5 Sector ETFs & Stocks to Benefit From May Inflation Report
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The annual inflation rate in the United States slowed to 3.3% in May 2024, the lowest in three months, compared to 3.4% in April and forecasts of 3.4%. Core CPI, which excludes changes for food and energy prices, hit 3.4%, below expectations of 3.5%. It marked the lowest rate since April 2021.
Compared to the previous month, the CPI was unchanged, the minimum since July 2022, compared to forecasts of a 0.1% increase and after a 0.3% rise in April. The monthly core inflation rate also fell to 0.2% from 0.3%, better than forecasts of 0.3%.
Prices have eased for consumer staples like gasoline and groceries. Housing inflation has been stubbornly high, though is falling slowly. Against this backdrop, below we highlight a few sector ETFs that may gain in the near term.
Sector ETFs to Gain
Real Estate – Real Estate Select Sector SPDR ETF (XLRE - Free Report)
Weighted shelter makes up 32.77% of CPI, of which 7.8% is rent and 23.68% is private housing, per data from MacroMicro. The shelter index jumped 0.4% in May sequentially and increased 5.4% annually.
The underlying Real Estate Select Sector Index includes securities of companies from the following industries real estate management and development and REITs, excluding mortgage REITs. The fund yields 3.51% annually and charges 9 bps in fees.
Meanwhile, American Tower (AMT - Free Report) , has a Zacks Rank #2 (Buy). It is a leading independent operator of wireless communications towers.
Medical Care Commodities – iShares U.S. Medical Devices ETF (IHI - Free Report)
The medical care commodities index rose 1.3% sequentially in May. The index has advanced 3.1% annually. The index grew 0.4% sequentially in April, indicating strong momentum in price gains.
The underlying Dow Jones U.S. Select Medical Equipment Index measures the performance of the medical equipment sector of the U.S. equity market.
Masimo (MASI - Free Report) , which has a Zacks Rank #1 (Strong Buy) deserves a mention. It develops, manufactures and markets a family of non-invasive monitoring systems.
The food-away-from index jumped 0.4% in May and 0.3% in April. Price index increased 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 revenue from the restaurant business.
CAVA Group Inc. (CAVA - Free Report) , which has a Zacks Rank #2, is a category-defining Mediterranean fast-casual restaurant brand.
Electric Utilities – AdvisorShares Restaurant ETF (EATZ - Free Report)
The electricity index was flat in May sequentially, but it increased 5.9% annually in May.
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 bps in fees and yields 3.09% annually.
CenterPoint Energy (CNP - Free Report) , which has a Zacks Rank #2, is a domestic energy delivery company that provides electric transmission and distribution, power generation, and natural gas distribution operations to more than 7 million metered customers across six states — Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas.
Although the transportation index dropped 0.5% sequentially in May, it rose 10.5% year over year.
The fund XTN 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.
As far as important stocks are concerned, Zacks Rank #3 (Hold) FedEx (FDX - Free Report) may be played. It is the leader in global express delivery services. The company provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the FedEx brand.
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5 Sector ETFs & Stocks to 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, compared to 3.4% in April and forecasts of 3.4%. Core CPI, which excludes changes for food and energy prices, hit 3.4%, below expectations of 3.5%. It marked the lowest rate since April 2021.
Compared to the previous month, the CPI was unchanged, the minimum since July 2022, compared to forecasts of a 0.1% increase and after a 0.3% rise in April. The monthly core inflation rate also fell to 0.2% from 0.3%, better than forecasts of 0.3%.
Prices have eased for consumer staples like gasoline and groceries. Housing inflation has been stubbornly high, though is falling slowly. Against this backdrop, below we highlight a few sector ETFs that may gain in the near term.
Sector ETFs to Gain
Real Estate – Real Estate Select Sector SPDR ETF (XLRE - Free Report)
Weighted shelter makes up 32.77% of CPI, of which 7.8% is rent and 23.68% is private housing, per data from MacroMicro. The shelter index jumped 0.4% in May sequentially and increased 5.4% annually.
The underlying Real Estate Select Sector Index includes securities of companies from the following industries real estate management and development and REITs, excluding mortgage REITs. The fund yields 3.51% annually and charges 9 bps in fees.
Meanwhile, American Tower (AMT - Free Report) , has a Zacks Rank #2 (Buy). It is a leading independent operator of wireless communications towers.
Medical Care Commodities – iShares U.S. Medical Devices ETF (IHI - Free Report)
The medical care commodities index rose 1.3% sequentially in May. The index has advanced 3.1% annually. The index grew 0.4% sequentially in April, indicating strong momentum in price gains.
The underlying Dow Jones U.S. Select Medical Equipment Index measures the performance of the medical equipment sector of the U.S. equity market.
Masimo (MASI - Free Report) , 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 - Free Report)
The food-away-from index jumped 0.4% in May and 0.3% in April. Price index increased 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 revenue from the restaurant business.
CAVA Group Inc. (CAVA - Free Report) , which has a Zacks Rank #2, is a category-defining Mediterranean fast-casual restaurant brand.
Electric Utilities – AdvisorShares Restaurant ETF (EATZ - Free Report)
The electricity index was flat in May sequentially, but it increased 5.9% annually in May.
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 bps in fees and yields 3.09% annually.
CenterPoint Energy (CNP - Free Report) , which has a Zacks Rank #2, is a domestic energy delivery company that provides electric transmission and distribution, power generation, and natural gas distribution operations to more than 7 million metered customers across six states — Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas.
Transportation – SPDR S&P Transportation ETF (XTN - Free Report)
Although the transportation index dropped 0.5% sequentially in May, it rose 10.5% year over year.
The fund XTN 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.
As far as important stocks are concerned, Zacks Rank #3 (Hold) FedEx (FDX - Free Report) may be played. It is the leader in global express delivery services. The company provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the FedEx brand.