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Retail sector ETFs such as SPDR S&P Retail (NYSEARCA:XRT) could see action later this week as some major holdings announce quarterly financial results.

July has seen mixed results from same-store stores, as the month is usually the second-slowest for the retailers and related sector.

"The month's results matter because they represent the latest read on consumer spending patterns ahead of the very important back-to- school selling period," Charles Grom, retail analyst from Deutsche Bank, said in a WSJ.com report.

According to a Deloitte survey, about one-third of consumers are planning on spending more for back-to-school clothes and wares, but not because of excess cash. Consumers are forced to accept the higher prices that have been common in the retail sector.

"Given the uncertain macro backdrop and several data points indicating recent global slowdown in Europe and Asia, expectations are low," Randal Konik, retail analyst at Jefferies & Co. said.

Major retailers such as JC Penny (NYSE:JCP), Kohl's (NYSE:KSS) and Nordstrom (NYSE:JWN) are scheduled to report quarterly earnings later this week. The fact that food and energy prices are elevated, and many Americans are without jobs is a poor backdrop for the retail sector.

Retail is a cyclical sector that plays on the opposite side of defensive sector such as utilities. The defensive sectors are popular during so-called "risk-off" climates, so when the retail segment of the market is strong, it implies that investors are taking on a bit of risk , or "risk-on".

However, the news is not all down. Dow Jones Newswires reports that the 18 retailers tracked by Thomson Reuters are expected to show 3.1% same-store sales growth for July. The figure compares with 4.8% growth last year.

"One question is - was July so good simply because of all the end-of-season clearance and promotional prices?" Michael Niemira, economist for the International Council of Shopping Centers said. "If that is the case, then we may still see a rather soft August, while consumers wait for the clearance in the beginning of September."

SPDR S&P Retail ETF

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Tisha Guerrero contributed to this article.

Source: ETF Spotlight On Retail Sector Earnings