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Inflation Cools in July: 4 Sector ETFs & Stocks to Thrive
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The annual inflation rate in the United States slowed for a fourth successive month to 2.9% in July 2024, the lowest since March 2021, compared to 3% in June and below forecasts of 3%. Inflation eased for shelter (5.1% vs 5.2%), transportation (8.8% vs 9.4%) and apparel (0.2 vs 0.8%). Also, prices continued to decline for new vehicles (-1% vs -0.9%) and used cars and trucks (-10.9% vs -10.1%) and food inflation steadied at 2.2%.
Despite this cooling, below we highlight a few sector ETFs and stocks that may gain in the near term as the price gains remained steady in those business areas.
The food-away-from index jumped 0.2% in July. Price index increased 4.1% annually.
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.
Brinker International (EAT - Free Report) , which has a Zacks Rank #1 (Strong Buy), owns, operates, develops and franchises various restaurants under Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) brands.
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 July. Index increased 5.1% 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 3.26% annually and charges 9 bps in fees.
Meanwhile, Host Hotels & Resorts (HST - Free Report) , has a Zacks Rank #3 (Hold). It is one of the leading lodging real estate investment trusts (REITs), which engages in the ownership, acquisition and redevelopment of luxury and upper-upscale hotels in the United States and abroad. The fund yields 4.97% annually.
The transportation index jumped 0.4% sequentially in July and rose 8.8% 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 (Buy).
As far as important stocks are concerned, Zacks Rank #3 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.
Medical Care Commodities– Health Care Select Sector SPDR ETF (XLV - Free Report)
The transportation index advanced 0.2% sequentially in July and rose 2.8% year over year.
The underlying Health Care Select Sector Index includes companies from the following industries: pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology.
Zacks Rank #1 (Strong Buy)Intuitive Surgical (ISRG - Free Report) designs, manufactures and markets the da Vinci surgical system, Ion endoluminal system and related instruments and accessories.
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Inflation Cools in July: 4 Sector ETFs & Stocks to Thrive
The annual inflation rate in the United States slowed for a fourth successive month to 2.9% in July 2024, the lowest since March 2021, compared to 3% in June and below forecasts of 3%. Inflation eased for shelter (5.1% vs 5.2%), transportation (8.8% vs 9.4%) and apparel (0.2 vs 0.8%). Also, prices continued to decline for new vehicles (-1% vs -0.9%) and used cars and trucks (-10.9% vs -10.1%) and food inflation steadied at 2.2%.
Despite this cooling, below we highlight a few sector ETFs and stocks that may gain in the near term as the price gains remained steady in those business areas.
Sector ETFs to Gain
Restaurants – AdvisorShares Restaurant ETF (EATZ)
The food-away-from index jumped 0.2% in July. Price index increased 4.1% annually.
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.
Brinker International (EAT - Free Report) , which has a Zacks Rank #1 (Strong Buy), owns, operates, develops and franchises various restaurants under Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) brands.
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 July. Index increased 5.1% 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 3.26% annually and charges 9 bps in fees.
Meanwhile, Host Hotels & Resorts (HST - Free Report) , has a Zacks Rank #3 (Hold). It is one of the leading lodging real estate investment trusts (REITs), which engages in the ownership, acquisition and redevelopment of luxury and upper-upscale hotels in the United States and abroad. The fund yields 4.97% annually.
Transportation – SPDR S&P Transportation ETF (XTN - Free Report)
The transportation index jumped 0.4% sequentially in July and rose 8.8% 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 (Buy).
As far as important stocks are concerned, Zacks Rank #3 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.
Medical Care Commodities – Health Care Select Sector SPDR ETF (XLV - Free Report)
The transportation index advanced 0.2% sequentially in July and rose 2.8% year over year.
The underlying Health Care Select Sector Index includes companies from the following industries: pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology.
Zacks Rank #1 (Strong Buy)Intuitive Surgical (ISRG - Free Report) designs, manufactures and markets the da Vinci surgical system, Ion endoluminal system and related instruments and accessories.