Banking, Consumer Discretionary And Corporate Bond ETFs To Watch This Week

The markets will open trading on Monday with high expectations to build on Fridays strength. However, stocks will have several obstacles to hurdle in order to re-capture upside momentum.

International headline worries over slowing growth combined with the uncertainty of earnings season could make for a volatile summer.

In addition, key economic events to watch this week will include: retail sales data, consumer price index, and University of Michigan consumer sentiment index.

Here are the key ETFs to watch for the week of July 13:

SPDR S&P Bank ETF (NYSE:KBE)

Many of the top large-cap stocks reporting earnings this week are banking institutions such as JP Morgan Chase, Wells Fargo & Coand Bank of America.As a result, investors should keep a close eye on KBE, which tracks 66 publicly traded banks.

KBE has been one of the stronger areas of the financial sector so far this year, posting a net return of 7.7 percent. This ETF is structured as a modified equal weighted index that gives a relatively proportional share of assets to each underlying holding.

Consumer Discretionary Select Sector SPDR (NYSE:XLY)

Retail stocks will be on display this week with the release of June sales data. The consensus forecast is for a gain of 0.2 percent versus the prior month. The outcome of this report has the potential to impact the 88 large-cap consumer spending stocks that make up XLY.

So far this year, XLY has gained over 7 percent and is currently trading near its 2015 highs. The relative strength and resilience of this index is a solid indication that consumers activity is healthy. In addition, its top holding, Walt Disney Cojust hit a new all-time high on Friday.

iShares Investment Grade Corporate Bond ETF (NYSE:LQD)

A two-day surge in interest rates last week was enough to push LQD back near its 2015 lows. This exchange-traded fund tracks a broad index of 1,400 bonds issued by high quality companies such as Verizon Communications and Citigroup Inc.

Since peaking in January, this ETF has fallen nearly 6 percent and is now trading well below the flat line for the year. The price action in LQD seems to indicate that bond investors are nervous about the prospects of a Federal Reserve rate hike and subsequent impact to fixed-income markets.