Nine of the 11 core sector indices fell on Monday.
Consumer staples led the declines among the 11 core S&P 500 sectors on Monday as the market corrected after substantial gains at the end of last week, following the Fed’s comments that raised hopes for an interest rate cut.
After largely staying resilient during the early tariffs-related selloffs and range-bound moves the last few months, the Consumer Staples Select Sector SPDR Fund (XLP) fell 1.7% on Monday, its steepest in two months.
Healthcare and utilities stocks followed up, with the Health Care Select Sector SPDR Fund (XLV) and Utilities Select Sector SPDR Fund (XLU) declining 1.4% and 1.1% respectively, as part of declines in nine sectoral indices. Communication and financial sector stocks rose.
Shares of Costco, Walmart, and Procter & Gamble, the top three XLP constituents based on their weight, fell 0.8% to 1.6%, signaling defensiveness among the top companies. However, Stocktwits sentiment data shows that retail investors are slightly more optimistic on consumer discretionary stocks than staple stocks.
The fall comes as investors peruse rate cut predictions ahead of the September meeting of the Fed and Nvidia earnings this week. The latter would determine the broader market sentiment for big tech stocks.
A more than 11% drop in shares of Keurig Dr Pepper also weighed heavily on the sector. Investors grew jittery after the U.S. beverages company announced a $18.4-billion acquisition of European coffee and tea giant JDE Peet’s.
To be sure, strong earnings from Walmart and Amazon recently have shown that U.S. consumer trends are upbeat, at least for regular and essential items. However, with frequent changes to the tariff policy continuing — President Donald Trump has indicated potential tariffs on furniture, while trade negotiations with the European Union and China are ongoing — risks could emerge.
So far this year, XLP has gained 3.12%, while the Consumer Discretionary Select Sector SPDR Fund (XLY) has gained 3.7%.
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