Industrials (XLI) vs Consumer Discretionary (XLY)
XLI (Industrial Select Sector SPDR Fund) and XLY (Consumer Discretionary Select Sector SPDR Fund) are both cyclical sectors but reflect different demand drivers. XLI top weights: GE Aerospace, Caterpillar, RTX, Boeing, Honeywell.
Also known as: Industrials (XLI) (ETF_XLI, industrials) · Consumer Discretionary (XLY) (ETF_XLY, consumer discretionary)
Why This Comparison Matters
XLI (Industrial Select Sector SPDR Fund) and XLY (Consumer Discretionary Select Sector SPDR Fund) are both cyclical sectors but reflect different demand drivers. XLI top weights: GE Aerospace, Caterpillar, RTX, Boeing, Honeywell. XLY top weights: Amazon ~22 percent, Tesla ~13 percent, Home Depot ~9 percent, McDonald's ~5 percent, Nike ~3 percent, TJX ~3 percent. April 2026: XLI ~$130 (defense + AI data center capex tailwind); XLY ~$220 (mixed - Amazon strong, Tesla -14% YTD). XLI/XLY ratio captures capex-cycle vs consumer-cycle relative strength. April 2026 setup: both pressured by different concerns. XLI benefits from defense + infrastructure; XLY pressured by GLP-1 + Tesla + consumer anxiety.
The April 2026 Configuration
XLI ~$130. XLY ~$220. XLI/XLY ratio approximately 0.59. XLI 2024 +20%, 2025 strong; XLY 2024 +30%, 2025 mixed.
XLI composition: aerospace/defense (GE, BA, RTX, LMT, NOC, GD) ~22%; capital goods/machinery (CAT, DE, ROK, ITW, EMR, ETN, PH) ~25%; transports (UNP, CSX, DAL, UPS, FDX, NSC) ~15%; building products (CARR, OTIS, JCI) ~5%; conglomerates (HON, MMM) ~10%.
XLY composition: Amazon ~22% (e-commerce, AWS), Tesla ~13% (autos, AI), Home Depot ~9% (housing renovation), McDonald's ~5% (food away), Nike ~3% (athletic), TJX ~3% (off-price retail), Booking ~3% (travel), Lowe's ~3%, Starbucks ~2%, Marriott ~2%.
April 2026: XLI driven by defense capex (NATO 2.5-3% GDP target) + AI data center construction (CAT, HON, JCI). XLY driven by Amazon + e-commerce; pressured by Tesla -14% YTD, GLP-1 affecting consumer (Mounjaro/Ozempic reducing food/beverage demand impacts MCD, SBUX), Iran war drag on consumer sentiment.
XLI/XLY ratio approximately stable in 2024-2026 reflecting balanced cyclical exposure.
Capex-driven vs Consumer-driven Cycles
XLI and XLY represent different cyclical drivers.
XLI capex-driven: business investment, defense spending, infrastructure capex, AI data center construction. Beneficiaries: CAT, DE, JCI, CARR. 5-10 year payoff cycles.
XLY consumer-driven: discretionary spending, autos, housing renovation, retail, travel, restaurants. Beneficiaries: Amazon (e-commerce), Tesla (auto), HD/LOW (renovation), MCD/SBUX (food away).
The cycle leadership rotates. Early-cycle: XLY leads (consumer spending recovery). Mid-cycle: XLI catches up (capex demand follows consumer demand). Late-cycle: both can lead. Recession: both fall.
April 2026 setup: XLI catching up phase (capex-driven) overlaps with XLY mixed (consumer anxiety + Tesla weakness). Different drivers but similar absolute performance.
How XLI and XLY Diverge
XLI > XLY: capex-driven cycle. Defense, infrastructure, AI capex driving. 2017-2018, 2024-2026 partial.
XLY > XLI: consumer-driven cycle. Strong consumer + retail + auto. 2009-2014 (post-GFC consumer recovery), 2020-2021 (COVID stimulus).
Conditional Forward Response (Tail Events)
How Consumer Discretionary (XLY) has historically behaved in the 5 sessions following a top-decile or bottom-decile daily move in Industrials (XLI). Computed from 1,285 aligned daily observations ending .
Following these triggers, Consumer Discretionary (XLY) rises 0.13% on average over the next 5 sessions, versus an unconditional baseline of +0.09%. 129 qualifying events; Consumer Discretionary (XLY) closed positive in 55% of them.
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Frequently Asked Questions
What are XLI and XLY?+
XLI (Industrial Select Sector SPDR Fund) tracks industrial sector with top weights GE Aerospace ~5%, Caterpillar ~5%, RTX ~4%, Boeing ~4%, Honeywell ~4%, Union Pacific ~3%. XLY (Consumer Discretionary Select Sector SPDR Fund) tracks consumer discretionary with top weights Amazon ~22%, Tesla ~13%, Home Depot ~9%, McDonald's ~5%, Nike ~3%, TJX ~3%, Booking ~3%, Lowe's ~3%, Starbucks ~2%. April 2026: XLI ~$130; XLY ~$220. XLI/XLY ratio ~0.59. XLI 2024 +20%, 2025 strong; XLY 2024 +30%, 2025 mixed. XLI driven by defense capex + AI data center construction; XLY pressured by Tesla -14% YTD + GLP-1 affecting MCD/SBUX.
How do capex-driven and consumer-driven cycles differ?+
XLI capex-driven: business investment, defense spending, infrastructure capex, AI data center construction. Beneficiaries: CAT, DE, JCI, CARR. 5-10 year payoff cycles. XLY consumer-driven: discretionary spending, autos, housing renovation, retail, travel, restaurants. Beneficiaries: Amazon (e-commerce), Tesla (auto), HD/LOW (renovation), MCD/SBUX (food away). Cycle leadership rotates. Early-cycle: XLY leads (consumer spending recovery). Mid-cycle: XLI catches up. Late-cycle: both can lead. Recession: both fall. April 2026 setup: XLI catching up phase (capex-driven) overlaps with XLY mixed (consumer anxiety + Tesla weakness).
How do XLI and XLY diverge?+
XLI > XLY: capex-driven cycle. Defense, infrastructure, AI capex driving. 2017-2018, 2024-2026 partial. XLY > XLI: consumer-driven cycle. Strong consumer + retail + auto. 2009-2014 (post-GFC consumer recovery), 2020-2021 (COVID stimulus). Both fall: recession (2008, 2020). Both rally: expansion (2010-2018, post-COVID 2020-2021). Long-run correlation 0.65-0.85 (both cyclicals). Strengthens during clear expansion/recession; weakens during late-cycle dispersion.
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