<div id="readability-page-1"><div><div><p>When the economy is strong, consumer discretionary stocks usually sprint ahead. But in 2025, the sector's two heaviest runners—<strong>Tesla Inc.</strong> (NASDAQ:TSLA) and<strong> Amazon.com Inc.</strong> (NASDAQ:AMZN)—are slowing the entire race, masking a healthier picture underneath.</p><p>The <strong>Consumer Discretionary Select Sector SPDR Fund</strong> (NYSE:XLY), which tracks top U.S. companies in autos, retail and leisure, has badly trailed the S&amp;P 500 this year.</p><p>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.</p><h2>Consumer Discretionary vs. Staples: An Unusual Market Picture</h2><p>On social media platform X, <strong>Liz Ann Sonders</strong>, chief investment strategist at Charles Schwab, said both the consumer discretionary and staples sectors are the two worst-performing groups in the S&amp;P 500, lagging the broader index by 12% and 11% year to date.</p><p>That kind of parallel weakness is rare: since 1996, the two sectors have moved in opposite directions in more than 70% of years.</p><p>“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.</p><h2>Not A Sectorwide Problem—Just Two Dormant Giants</h2><p>The discretionary sector's exceptional underperformance might be less about consumer fatigue and more about stock concentration.</p><p>Two companies—<strong>Amazon.com Inc. </strong> and <strong>Tesla Inc. </strong>—account for 42% of the XLY ETF, each weighing in at roughly 21%.</p><p>Amazon's stock is flat in 2025, while Tesla is up just 6%, meaning nearly half of the ETF's exposure is tied to low or modest returns. </p><p>Their combined contribution to XLY's year-to-date gain is roughly 2 percentage points, far below expectations for a sector that should be thriving in a strong economy.</p><p>By comparison, the pair make up only 5% of the S&amp;P 500's total weight, so their drag on the broader market is minimal—but devastating inside discretionary. </p><p>Out of 50 stocks in XLY, 33 are up year-to-date and 17 are down, indicating that much of the sector is quietly performing well.</p><h2>Equal Weight Tells A Stronger Story</h2><p>If every stock in the consumer discretionary sector carried the same weight, investors would be seeing a far more upbeat picture. </p><p>The<strong> Invesco S&amp;P 500 Equal Weight Consumer Discretionary ETF</strong> (NYSE:RSPD) is up 9.2% year to date, outperforming the cap-weighted XLY, which has gained only 7.7%.</p><p>This shows that beneath the surface, smaller and mid-sized companies in the discretionary sector are quietly delivering steadier, more broadly distributed gains than their larger peers.</p><p>In fact, the equal-weight version of the discretionary sector has performed almost in line with the broader market's equal-weight benchmark — the <strong>Invesco S&amp;P 500 Equal Weight ETF</strong> (NYSE:RSP) — effectively erasing the sector's unusual 2025 underperformance once the dominance of Tesla and Amazon is stripped away.</p><p>Consumer discretionary stands out as one of the few sectors where equal-weight beats cap-weight, alongside energy and utilities.</p><p>Energy's equal-weight version outperformed by a stunning 7.6 percentage points, while utilities' equal-weight ETF edged out its cap-weighted rival by 0.8 points.</p><h2>The Bottom Line</h2><p>Tesla and Amazon's sluggish performance has turned the consumer discretionary sector into an unexpected laggard in 2025. </p><p>But peel back their dominance, and the picture looks brighter: most companies in the sector are actually performing about as well as the broader market once they're given equal footing.</p><p>In a year when Big Tech continues to steer index performance, the strength of equal-weight ETFs in sectors like discretionary, energy and utilities serves as a reminder—sometimes, the real health of the market lies in its breadth, not its biggest names.</p><ul> <li><strong>Nvidia Is Now An AI Hedge Fund—But Goldman Says The Math May Not Work</strong><br/></li> </ul><p><em> Photo: Shutterstock</em></p></div></div></div>

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<p>Tesla and Amazon's underperformance is dragging down the consumer discretionary sector in 2025, despite a strong economy. The Consumer Discretionary Select Sector SPDR Fund (XLY) has lagged behind the S&P 500, with both sectors underperforming significantly. However, much of the sector is performing well, as shown by the Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RSPD), which is up 9.2% year-to-date. This indicates that smaller and mid-sized companies are thriving, highlighting the importance of looking beyond major players like Tesla and Amazon.</p>

- In 2025, consumer discretionary stocks, particularly Tesla Inc. and Amazon.com Inc., are underperforming, dragging down the Consumer Discretionary Select Sector SPDR Fund despite strong consumer spending.  
- The two companies account for 42% of the ETF, with their modest returns significantly impacting the sector's performance, while 33 out of 50 stocks in the ETF are actually up year-to-date.  
- The Invesco S&P 500 Equal Weight Consumer Discretionary ETF shows a more positive outlook, up 9.2%, indicating that smaller and mid-sized companies are performing well despite the struggles of the larger players.  

Tesla And Amazon Just Became A Problem For The Entire Discretionary Sector