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Though the first quarter was upbeat for Wall Street, bouts of volatility constantly crossed paths due to rising rate worries that mainly resulted in growth stock sell-off. Tax hike worries also bothered market sentiments occasionally. Overall, the Dow Jones Industrial Average and the S&P 500 surged 7.8% and 5.8%, respectively, in first-quarter 2021.
However, Wall Street seems to have kicked off April with more vigor as the S&P 500 has already crossed the 4,000 mark and is still running steady. The value-stock heavy Dow Jones and the tech-heavy Nasdaq too are doing well this month. Upbeat U.S. economic indicators in the area of jobs and manufacturing have been aiding the rally (read: 4 Sector ETFs to Sizzle on Robust March Jobs Report).
Fast COVID-19 vaccinations, progress on biotech researches on vaccines, and an unprecedented fiscal stimulus have been the other catalysts. President Joe Biden last week unveiled an additional $2 trillion spending plan (over and above the COVID-19 stimulus bill) over 10 years toward restoring transportation, communication and power infrastructure. The infrastructure plan will be paired with an additional $1 trillion in spending focused on social programs and is expected to be unveiled in April (read: ETFs to Win on Biden's Infrastructure Plan).
According to Ryan Detrick at LPL Financial, “stocks have closed higher in April an incredible 14 of the past 15 years.” He also pointed out that April has been the best month over the past 20 years. Also, any money normally used to pay capital gains taxes will be deferred until mid-May thanks to the recent IRS tax filing extension, as quoted on Yahoo Finance.
According to moneychimp.com, a consensus carried out from 1950 to 2020 has revealed that April ended up offering positive returns in 50 years and negative returns in 21 years, with an average return of positive 1.56%, the best month of the year with November taking the second position with historic 1.53% returns.
Investors should also note that the latest spurt in bond yields have also moderated in recent sessions. If the trend remains so, we can see a great stock market run in April. Against this backdrop, below we highlight a few ETFs that could be great pick for April.
It’s a nice mix of every sector with a tilt toward technology that has lost a lot in recessionary weeks and now probably is a lucrative entry point. Upbeat economic data points and Biden’s plan should favor the other cyclical sectors. Analysts see more run for the S&P 500 (read: S&P 500 Tops 4,000: Are ETFs Awaiting More Gains?).
JPMorgan's chief global markets strategist has a 2021 year-end price target of 4,400 for the S&P 500, and sees yields to calm and boost stocks including technology stocks higher, as quoted on Business Insider. In early March, UBS said that stimulus and pent-up consumer spending would push the S&P 500 to 4,250, as quoted on CNBC. Wall Street bull Ed Yardeni sees the S&P 500 year-end target as 4,300. For 2022, it’s 4,800, as quoted on CNBC.
Global X U.S. Infrastructure Development ETF (PAVE - Free Report)
Biden’s plans to bolster infrastructure will favor the fund. The underlying INDXX U.S. Infrastructure Development Index measures the performance of U.S. listed companies that provide exposure to domestic infrastructure development, including companies involved in construction and engineering; production of infrastructure raw materials, composites and products; industrial transportation; and producers/distributors of heavy construction equipment.
The underlying Solactive Autonomous & Electric Vehicles Index tracks the price movements in shares of companies, which are active in the electric vehicles and autonomous driving segments. The United States takes the top spot in the fund with about 60% exposure. The fund has exposure to those semiconductor companies that President Biden has paid attention to in his latest infrastructure plan, EV makers as well as other companies (read: Guide to Electric Vehicle ETFs).
Blowout jobs report, monetary and fiscal stimulus, still-low oil prices, and upbeat U.S. consumer confidence point to strength in consumer discretionary stocks. However, investors should note that the fund is heavy on Amazon (23.14%) followed by Tesla (13.57%) and Home Depot (8.85%) (read: Why Fear Rising Rates? Play Cyclical ETFs).
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4 ETFs to Buy in April to Tap Likely Market Rally
Though the first quarter was upbeat for Wall Street, bouts of volatility constantly crossed paths due to rising rate worries that mainly resulted in growth stock sell-off. Tax hike worries also bothered market sentiments occasionally. Overall, the Dow Jones Industrial Average and the S&P 500 surged 7.8% and 5.8%, respectively, in first-quarter 2021.
However, Wall Street seems to have kicked off April with more vigor as the S&P 500 has already crossed the 4,000 mark and is still running steady. The value-stock heavy Dow Jones and the tech-heavy Nasdaq too are doing well this month. Upbeat U.S. economic indicators in the area of jobs and manufacturing have been aiding the rally (read: 4 Sector ETFs to Sizzle on Robust March Jobs Report).
Fast COVID-19 vaccinations, progress on biotech researches on vaccines, and an unprecedented fiscal stimulus have been the other catalysts. President Joe Biden last week unveiled an additional $2 trillion spending plan (over and above the COVID-19 stimulus bill) over 10 years toward restoring transportation, communication and power infrastructure. The infrastructure plan will be paired with an additional $1 trillion in spending focused on social programs and is expected to be unveiled in April (read: ETFs to Win on Biden's Infrastructure Plan).
According to Ryan Detrick at LPL Financial, “stocks have closed higher in April an incredible 14 of the past 15 years.” He also pointed out that April has been the best month over the past 20 years. Also, any money normally used to pay capital gains taxes will be deferred until mid-May thanks to the recent IRS tax filing extension, as quoted on Yahoo Finance.
According to moneychimp.com, a consensus carried out from 1950 to 2020 has revealed that April ended up offering positive returns in 50 years and negative returns in 21 years, with an average return of positive 1.56%, the best month of the year with November taking the second position with historic 1.53% returns.
Investors should also note that the latest spurt in bond yields have also moderated in recent sessions. If the trend remains so, we can see a great stock market run in April. Against this backdrop, below we highlight a few ETFs that could be great pick for April.
Vanguard S&P 500 ETF (VOO - Free Report)
It’s a nice mix of every sector with a tilt toward technology that has lost a lot in recessionary weeks and now probably is a lucrative entry point. Upbeat economic data points and Biden’s plan should favor the other cyclical sectors. Analysts see more run for the S&P 500 (read: S&P 500 Tops 4,000: Are ETFs Awaiting More Gains?).
JPMorgan's chief global markets strategist has a 2021 year-end price target of 4,400 for the S&P 500, and sees yields to calm and boost stocks including technology stocks higher, as quoted on Business Insider. In early March, UBS said that stimulus and pent-up consumer spending would push the S&P 500 to 4,250, as quoted on CNBC. Wall Street bull Ed Yardeni sees the S&P 500 year-end target as 4,300. For 2022, it’s 4,800, as quoted on CNBC.
Global X U.S. Infrastructure Development ETF (PAVE - Free Report)
Biden’s plans to bolster infrastructure will favor the fund. The underlying INDXX U.S. Infrastructure Development Index measures the performance of U.S. listed companies that provide exposure to domestic infrastructure development, including companies involved in construction and engineering; production of infrastructure raw materials, composites and products; industrial transportation; and producers/distributors of heavy construction equipment.
Autonomous & Electric Vehicles ETF (DRIV - Free Report)
The underlying Solactive Autonomous & Electric Vehicles Index tracks the price movements in shares of companies, which are active in the electric vehicles and autonomous driving segments. The United States takes the top spot in the fund with about 60% exposure. The fund has exposure to those semiconductor companies that President Biden has paid attention to in his latest infrastructure plan, EV makers as well as other companies (read: Guide to Electric Vehicle ETFs).
Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report)
Blowout jobs report, monetary and fiscal stimulus, still-low oil prices, and upbeat U.S. consumer confidence point to strength in consumer discretionary stocks. However, investors should note that the fund is heavy on Amazon (23.14%) followed by Tesla (13.57%) and Home Depot (8.85%) (read: Why Fear Rising Rates? Play Cyclical ETFs).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>