Consumer Spending Drives Stock Market to Record Highs

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NEW YORK (TheStreet) -- Cyclical stocks linked to consumer spending are leading the market higher, which bodes well for further gains in U.S. equities.

Consumer Discretionary Select Sector SPDR and SPDR S&P Retail have hit record highs this week on positive economic data and improved corporate outlooks over the next year.

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The consumer-discretionary exchange-traded fund is most heavily weighted by Amazon , Comcast , Disney . Home Depot and McDonald's

The the retail ETF, which is equal weighted, contains CarMax , Family Dollar Stores , GameStop , Lands' End and PetSmart .

The chart below shows that both ETFs have outperformed SPDR S&P 500 during the past month, signaling that economically sensitive sectors underlie the gains in U.S. equities.

XLY Chart
XLY data by YCharts

Consumer stocks were aided this week by a report that the U.S. consumer-confidence figure improved unexpectedly, reaching its highest level since October 2007. The Conference Board said on Tuesday that its index of consumer confidence rose to 92.4 in August from a reading of 90.3 in July.

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