The American consumer isn’t just a piece of the U.S. economy – they are the engine driving it.
Nearly 70% of gross domestic product (GDP) comes directly from household spending. The everyday choices people make – what they buy, where they travel, how they splurge – accounts for the majority of economic output.
Now, I’m no economist (thank goodness), and I don’t spend my days buried in fundamental spreadsheets. But even I can agree that tracking consumer behavior is critical if you want to understand the bigger picture.
That’s why it grabs my attention when the Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RSPD) rips to new all-time highs:
This isn’t just Amazon.com (AMZN) flexing its size or Tesla (TSLA) dominating the scoreboard – every stock in the group gets the same vote.
From DoorDash (DASH) to Las Vegas Sands (LVS), they all carry equal weight in this index, regardless of market capitalization.
Where Are the Leaders?
With the equal-weight version of the Consumer Discretionary index already hitting new all-time highs, where’s the market-cap version?
What’s holding back the bellwethers – AMZN, TSLA, Home Depot (HD), McDonald’s (MCD)?
Here’s the chart of the market-cap weighted Consumer Discretionary Select Sector SPDR ETF (XLY) in blue, overlaid with the equal-weight version that’s already hitting all-time highs:
For me, if these lines are going up, the market isn’t falling apart.
It’s quite the opposite, actually. These are the types of stocks that should be doing well in a healthy market environment.
These are Retailers, Homebuilders, Automakers, and Leisure stocks.
Sector Rotation
The way I learned it is that sector rotation is the lifeblood of a bull market.
During the first half of 2025, Consumer Discretionary was flat, with zero return. This was on an equal-weight basis.
From a market-cap weighted perspective, Consumer Discretionary was actually down during the first half of the year, losing 2.66% of value. It was the worst-performing sector in the market.
Take a look at price action for the current quarter:
Consumer Discretionary is the best-performing sector in the U.S. on both a market-cap-weighted AND an equal-weight basis.
That’s a 7.5% return so far this quarter.
This is exactly what I mean by “sector rotation”: Every group gets its moment in the spotlight.
They say the consumer is tapped out, stretched thin, and can’t afford to spend.
But the market is telling a very different story.
And, if there’s one thing I’ve learned, it’s that price always speaks louder than the headlines.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs