The Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY), which tracks top U.S. companies in autos, retail and leisure, has badly trailed the S&P 500 this year.
Instead of capturing consumers' strong appetite for spending, backed by record-high U.S. asset prices and lower interest rates, the sector is underperforming the broader market by one of the widest margins seen in the past 15 years.
Consumer Discretionary vs. Staples: An Unusual Market Picture
On social media platform X, Liz Ann Sonders, chief investment strategist at Charles Schwab, said both the consumer discretionary and staples sectors are the two worst-performing groups in the S&P 500, lagging the broader index by 12% and 11% year to date.
That kind of parallel weakness is rare: since 1996, the two sectors have moved in opposite directions in more than 70% of years.
“And even in years when they both lagged, they never both lagged by this much: in prior years, at least one of the two sectors limited its underperformance at under 6%,” she said.
S&P 500 Staples and Discretionary haven't just been weak this month, but also the whole year: they are the two worst-performing sectors year-to-date, trailing their parent index by 12% and 11%, respectively. The simultaneous weakness of the two sectors in a calendar year is… pic.twitter.com/OvqYjhspgF
— Liz Ann Sonders (@LizAnnSonders) October 6, 2025
Not A Sectorwide Problem—Just Two Dormant ...
