Rising U.S.-Iran-Israel tensions could trigger a 20% S&P 500 drop-ETFs in staples, defense and volatility gain focus.
After a 16-year-long bull market that saw the S&P 500 rise from 676 to the current 5,802, it might be time to start thinking defensive. Broad consumer staple ETFs like XLP demand similar valuations to the S&P 500, making them more vulnerable to market downturns. The sector's companies face new challenges: eroding brand equity, competition from private labels, inflation-hit consumers, and low dividend yields compared to Treasuries.
Looking for broad exposure to the Consumer Staples - Broad segment of the equity market? You should consider the Consumer Staples Select Sector SPDR ETF (XLP), a passively managed exchange traded fund launched on 12/16/1998.
The market is experiencing a sector rotation from consumer discretionary stocks like Starbucks to consumer staples stocks like Kroger. This shift is driven by reactions to President Trump's reindustrialization efforts, tariff uncertainties, and a re-pricing of tech stocks. Investors should consider reallocating their portfolios to include more consumer staples to mitigate risks associated with current market volatility.
Consumer staples stocks should be well-positioned as the overall economy slows down. I am not a fan of the XLP ETF, however, due to its significant exposure to retail stocks. I am buying individual consumer staples stocks at present valuations, but I'm taking a pass on this particular fund.
Launched on 12/16/1998, the Consumer Staples Select Sector SPDR ETF (XLP) is a passively managed exchange traded fund designed to provide a broad exposure to the Consumer Staples - Broad segment of the equity market.
Wall Street has been in a wavering condition lately as U.S. economic data heightened investor fears of a slowing economy and persistent inflation. This prompted a shift toward safer assets.
Danny Kirsch discusses the potential negatives for consumer staples with the new Trump administration, including red dye bans, nicotine regulations, and tariffs squeezing commodity prices even higher. If bearish, he gives an example of buying put spreads in XLP, the SPDR Consumer Staples sector ETF.
Defensive stocks underperformed in 2024; Consumer Staples rose 12%, lagging the S&P 500's 23% gain, but outperformed sectors like Energy and Real Estate. Entering 2025, the Consumer Staples sector trades at a 20.7x P/E ratio, with Walmart and Costco significantly influencing the XLP ETF. XLP's top three holdings, COST, WMT, and PG, account for nearly 30% of the ETF, with high valuations but stable dividends.
Designed to provide broad exposure to the Consumer Staples - Broad segment of the equity market, the Consumer Staples Select Sector SPDR ETF (XLP) is a passively managed exchange traded fund launched on 12/16/1998.
Designed to provide broad exposure to the Consumer Staples - Broad segment of the equity market, the Consumer Staples Select Sector SPDR ETF (XLP) is a passively managed exchange traded fund launched on 12/16/1998.
The Consumer Staples Select Sector SPDR® Fund ETF is recommended for portfolio stability and long-term steady returns, especially for low-risk tolerance investors. Despite underperforming in a tech-driven bull market, consumer staples are financially sound, with expected 7.5% average earnings growth over the next 3-5 years. XLP offers targeted exposure to high-quality, large-cap companies with strong brand recognition, solid business models, and consistent dividend growth.