Travel & Entertainment ETFs at a 52-Week High: Here’s Why

The third quarter of 2024 has been extremely volatile for the U.S. stock market. Recession concerns, geopolitical tensions, a fading craze for AI (artificial intelligence), and uncertainty over the upcoming elections have left investors uneasy.

However, the past month has been decent for Wall Street, as shown by the 1.2% return generated by the SPDR S&P 500 ETF Trust SPY. Wall Street normally offers upbeat performance in the fourth quarter. Over the past decade, the fourth quarter of the year has actually been the best for the stock market, with the Dow, the S&P 500 and the Nasdaq up at least 4% on average, per a CNBC article.

The S&P 500 had traded positively 80% of the time, according to a CNBC analysis of Kensho, a market data analysis platform. The Dow Jones Industrial Average had added 5% in four quarters over the past 10 years, trading positive 80% of the time. Moreover, inflation is easing and rates are falling this time around (read: 4 Sector ETFs to Buy for the Fourth Quarter of 2024).

The late October-December period embraces the key holiday season, which puts the spotlight on the performance of retailers. As loads of sales-boosting events — Halloween, Thanksgiving, Cyber Monday, Black Friday and Christmas — fall in this quartile, the retail and entertainment sectors generally see a sales boost.

No wonder,leisure and entertainment exchange-traded funds (ETFs) likeUS Global Jets ETF JETS, Advisorshares Restaurant ETF EATZ, Defiance Hotel Airline and Cruise ETF CRUZ and Dynamic Leisure and Entertainment PEJ have been hovering around a 52-week high.

What Lies Ahead of Travel & Entertainment ETFs?

According to PwC’s 2024 Holiday Outlook Survey, travel trends this holiday season are similar to those of last year, with a net 46% of consumers planning trips. This year, 43% are opting for destinations within the United States (compared to 42% in 2023), and 8% are planning international travel (versus 7% in 2023).

Nearly three-quarters (73%) of travelers plan to drive — which may be due to falling gasoline prices. Notably, WTI crude oil ETF United States Oil Fund LP USO is off 11.4% over the past six months. Dcent travel and lodging costs, coupled with steady airline occupancy rates are great for the above-mentioned leisure ETFs’ prices.

Airfare for Thanksgiving trips is currently averaging $298 per round-trip ticket, up 10% from this time last year and 3% from pre-pandemic. Airfare to international destinations in Mexico and Central America, prevalent for shorter holiday trips, is down compared to last year.

Story continues

Restaurant Sales to Rise Meaningfully?

More holidaying means more visits to restaurants. Nearly 20% of leisure travelers seek out new restaurants or culinary experiences, according to a new report from Hilton. If this is not enough, many consumers normally plan to visit restaurants during the end-of-year holidays, while others plan to order delivery or takeout for events at home.

Overall, the National Retail Federation (NRF) expects holiday season sales in the US in 2024 to increase 2.5–3.5% from 2023. This is a slower pace than the 3.9% year-over-year increase in 2023, but is consistent with the average increase from 2010–2019.

In 2023, Americans spent more on food, with restaurant spending up 7.8% year-over-year, and grocery spending up 2.1%, even as food inflation eased. Using this 2023 data alongside the 2024 retail sales forecast, one can estimate the potential gains for restaurant sales this holiday season.

ETFs in Focus

Against this backdrop, investors should keep track of the aforementioned ETFs that are at a one-year high. Additionally, ProShares On-Demand ETF OND and Amplify Travel Tech ETF AWAY also deserve attention.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Amplify Travel Tech ETF (AWAY): ETF Research Reports

SPDR S&P 500 ETF (SPY): ETF Research Reports

United States Oil ETF (USO): ETF Research Reports

U.S. Global Jets ETF (JETS): ETF Research Reports

Invesco Leisure and Entertainment ETF (PEJ): ETF Research Reports

AdvisorShares Restaurant ETF (EATZ): ETF Research Reports

Defiance Hotel, Airline, and Cruise ETF (CRUZ): ETF Research Reports

ProShares On-Demand ETF (OND): ETF Research Reports

To read this article on Zacks.com click here.

Zacks Investment Research