Winter Storm Fern is expected to deliver a sharp but temporary hit to U.S. economic growth, with Bank of America estimating a 0.5–1.5 percentage point drag on the first quarter 2026 GDP, according to Yahoo Finance.
Drawing comparisons to Winter Storm Viola in 2021, the bank argues that most of the disruption reflects delayed economic activity rather than permanent demand destruction, and this is a critical distinction for investors.
Extreme weather shocks can trigger brief rotations into defensive ETFs, including consumer staples and utilities, as investors react to headline risk and near-term data weakness. However, those spikes may lose momentum once economic activity normalizes, leaving late defensive positioning vulnerable during the recovery phase. This is due to investors regaining optimism as economy-driving factors normalize, making them comfortable to explore riskier bets.
Consumer Spending Signals Resilience Beneath The Snow
Bank of America's card data suggests the consumer entered the year on solid footing. Household spending rose 3.3% year over year in mid-January, with strength in groceries and lodging. The data implies that Fern interrupted activity that was already underway, rather than exposing underlying weakness in demand.
Some ETFs that are focused on sectors which consistently enjoy investor interest, whatever the weather, are:
Consumer Staples Select Sector SPDR Fund (NYSE:XLP): Tracks large U.S. companies that make everyday essentials, such as food and household goods. This sector often holds up in uncertain periods.
Vanguard Consumer Staples ETF (NYSE:VDC): Broader consumer staples exposure with a larger set of holdings, including big names like Walmart Inc (NASDAQ:WMT) and Procter & Gamble Co (NYSE:PG).
iShares U.S. Consumer Staples ETF (NYSE:IYK): Another broad staples play with a mix of everyday goods producers.
Travel snd Cyclicals Face Near-Term Pain
With more than 13,000 flights canceled and roughly 70% of the U.S. population under winter weather alerts, ETFs tied to travel, airlines and discretionary spending have absorbed the immediate fallout. Yet similar disruptions in 2021 were followed by sharp rebounds in the same segments as mobility recovered.
US Global Jets ETF (NYSE:JETS) fund hasn’t moved this month. Flow data by ETFDb, from February 2021, shows that the fund had seen mild outflows toward the beginning of the month, days ahead of the storm Viola, and started rebounding toward the last leg of the storm.
Consumer Discretionary Sector ETFs such as iShares US Consumer Discretionary ETF (NYSE:IYC) and State Street Consumer Discretionary Select Sector SPDR ETF (NYSE:XLY) can bounce back strongly once activity resumes if consumers pull back only temporarily rather than permanently, thanks to pent-up demand.
Q2 Could Inherit Q1's Lost Growth
January data was already expected to be noisy due to seasonal effects and tough December comparisons, per Yahoo Finance. Fern adds another layer of distortion, potentially exaggerating first-quarter weakness while masking upside risks to second-quarter growth.
Bank of America sees the storm as a timing reshuffle, arguing there is "as much upside to Q2 GDP growth as there is downside to Q1."
The ETF Risk
For ETF investors, the key risk may be mistaking weather-driven volatility for a structural slowdown. If growth reappears as expected in the spring, cyclical and mobility-linked ETFs could benefit disproportionately — rewarding investors willing to look through the storm rather than retreat from it.
Photo: Olezzo via Shutterstock
