While the consumer discretionary sector has been flat year-to-date, a recent 11% surge in the past month, driven by heavyweights Amazon.com Inc. (AMZN) and Tesla Inc. (TSLA), suggests a potential turnaround for the lagging sector. The two companies make up nearly half of the State Street Consumer Discretionary Select Sector ETF (XLY), giving them significant influence over its direction.
"Depending on their price direction, those two stocks can pull their peers higher or lower, and therefore, monitoring their behavior is important," said Doug Busch, senior technical analyst at Barron’s Investor Circle. The path of these two giants will likely have a major influence on the broader consumer discretionary group.
A clear divergence has emerged between the two stocks in 2026. Amazon surged 29% over the last three months to an all-time high, while Tesla remained unchanged over the same period. However, Tesla has recently shown renewed momentum, rallying 14% in the week ending April 14 and gaining over 5% this week as the XLY added 1%.
The simultaneous strengthening of both Amazon and Tesla could drive additional inflows into the sector ETF, providing broader support for other discretionary stocks. Technical analysis suggests further upside for both. Amazon's chart shows a target of $325 by mid-2026, a 23% upside, while Tesla's chart indicates a potential move toward $500 in the third quarter, representing a 22% gain.
Amazon's stock is currently on its first six-week winning streak since late 2023. After clearing a double-bottom pivot at $249.04 on April 16, the stock has been trading solidly above that level. While a bearish MACD crossover is possible in the near term, the preferred strategy is to look for entries closer to $265. The bullish outlook remains intact as long as the stock stays above $245.
Tesla's stock has begun to outperform its electric-vehicle rival Rivian, breaking above a bullish ascending triangle on the ratio chart. The stock has reclaimed both its 200-day simple moving average and its 21-day exponential moving average. The bullish thesis remains valid as long as Tesla stays above $389, with a target of $500 during the third quarter.
This article is for informational purposes only and does not constitute investment advice.
