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.
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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.
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