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The Zacks Analyst Blog Highlights Invesco S&P 500 Enhanced Value ETF, SPDR S&P Retail ETF, SPDR Portfolio S&P 600 Small Cap ETF and Industrial Select Sector SPDR Fund
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For Immediate Release
Chicago, IL – November 7, 2022 – Zacks.com announces the list of stocks and ETFs featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. ETFs recently featured in the blog include: Invesco S&P 500 Enhanced Value ETF (SPVU - Free Report) , SPDR S&P Retail ETF (XRT - Free Report) , SPDR Portfolio S&P 600 Small Cap ETF (SPSM - Free Report) and Industrial Select Sector SPDR Fund (XLI - Free Report) .
Here are highlights from Friday’s Analyst Blog:
How to Play the Fed's 4th 75-bps Rate Hike with ETFs
As expected, the Federal Reserve boosted its benchmark interest rate by three-quarters of a point this week for a fourth straight time but indicated that it could soon reduce the size of its rate hikes. Fed Chair Jerome Powell reiterated the central bank's commitment to hike rates further in order to tame multi-decade highs in inflation.
The Fed’s latest move raised its key short-term rate to a range of 3.75% to 4%, its highest level in 15 years. November’s move marked the U.S. central bank’s sixth rate hike this year. The central bank also signaled that future increases in borrowing costs could be made in smaller steps to account for the “cumulative tightening of monetary policy” it has enacted so far.
Future moves were also expected in the market. Market watchers believe that the Fed’s next expected rate hike in December may be only a half-point rather than three-quarters. Per CME FedWatch Tool, the likelihood of a 50-bp rate hike in December is 52% now while the rest expects a 75-bp rate hike.
How to Play?
Value
Value stocks have a low price-to-book ratio (P/B)— a measure of market cap relative to tangible assets, per a Wall Street Journal article. The lower the price-to-book ratio, the higher the value. This makes them a gem-like bet amid economic uncertainties caused by high inflation and rising rates.
Value stocks perform better in a rising rate environment which we have been witnessing currently. Moreover, during the peak of the pandemic, value stocks were hit hard. With economic reopening gaining traction, now is the time for them to flourish on beaten-down valuation. Invesco S&P 500 Enhanced Value ETF has a Zacks Rank #1 (Strong Buy).
Retail
Now, who can overlook consumer discretionary ETFs at this point of the year, especially with events like Thanksgiving, Black Friday and Cyber Monday lined up? The National Retail Federation expects holiday season sales to increase between 10% and 12% to between $262.8 billion and $267.6 billion. This figure is up from $238.9 billion last year. Moreover, retail is a cyclical industry and often fares better in a rising rate environment. Our pick for the busy holiday season is Zacks Rank #2 (Buy) SPDR S&P Retail ETF (read: Can ETFs Enjoy Halloween Effect Despite Rising Rate Fear?).
Small-Caps
This is a tricky space. The Halloween Effect on Russell 2000 was a gain of 494% versus 373% offered by the S&P 500 from February 1993 through 2010-end. Plus, small-cap securities have historically proven their outperformance in January. Plus, if the Fed enacts a softer rate hike in December, risk-on sentiments should bounce back. These factors put the focus on the small-cap ETF SPDR Portfolio S&P 600 Small Cap ETF, which has a Zacks Rank #2.
Industrials
Industrial stocks historically yielded encouraging returns from December to May. However, the Industrial Select Sector SPDR Fund has outperformed the S&P 500 this year. Biden’s huge infrastructure plan is a positive for the space. Notably, production levels at U.S. factories rose for the third straight month in September, driven by growth in manufacturing activity, which has been bolstered by higher demand for consumer goods. The fund XLI has a Zacks Rank #2.
Why Haven’t You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights Invesco S&P 500 Enhanced Value ETF, SPDR S&P Retail ETF, SPDR Portfolio S&P 600 Small Cap ETF and Industrial Select Sector SPDR Fund
For Immediate Release
Chicago, IL – November 7, 2022 – Zacks.com announces the list of stocks and ETFs featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. ETFs recently featured in the blog include: Invesco S&P 500 Enhanced Value ETF (SPVU - Free Report) , SPDR S&P Retail ETF (XRT - Free Report) , SPDR Portfolio S&P 600 Small Cap ETF (SPSM - Free Report) and Industrial Select Sector SPDR Fund (XLI - Free Report) .
Here are highlights from Friday’s Analyst Blog:
How to Play the Fed's 4th 75-bps Rate Hike with ETFs
As expected, the Federal Reserve boosted its benchmark interest rate by three-quarters of a point this week for a fourth straight time but indicated that it could soon reduce the size of its rate hikes. Fed Chair Jerome Powell reiterated the central bank's commitment to hike rates further in order to tame multi-decade highs in inflation.
The Fed’s latest move raised its key short-term rate to a range of 3.75% to 4%, its highest level in 15 years. November’s move marked the U.S. central bank’s sixth rate hike this year. The central bank also signaled that future increases in borrowing costs could be made in smaller steps to account for the “cumulative tightening of monetary policy” it has enacted so far.
Future moves were also expected in the market. Market watchers believe that the Fed’s next expected rate hike in December may be only a half-point rather than three-quarters. Per CME FedWatch Tool, the likelihood of a 50-bp rate hike in December is 52% now while the rest expects a 75-bp rate hike.
How to Play?
Value
Value stocks have a low price-to-book ratio (P/B)— a measure of market cap relative to tangible assets, per a Wall Street Journal article. The lower the price-to-book ratio, the higher the value. This makes them a gem-like bet amid economic uncertainties caused by high inflation and rising rates.
Value stocks perform better in a rising rate environment which we have been witnessing currently. Moreover, during the peak of the pandemic, value stocks were hit hard. With economic reopening gaining traction, now is the time for them to flourish on beaten-down valuation. Invesco S&P 500 Enhanced Value ETF has a Zacks Rank #1 (Strong Buy).
Retail
Now, who can overlook consumer discretionary ETFs at this point of the year, especially with events like Thanksgiving, Black Friday and Cyber Monday lined up? The National Retail Federation expects holiday season sales to increase between 10% and 12% to between $262.8 billion and $267.6 billion. This figure is up from $238.9 billion last year. Moreover, retail is a cyclical industry and often fares better in a rising rate environment. Our pick for the busy holiday season is Zacks Rank #2 (Buy) SPDR S&P Retail ETF (read: Can ETFs Enjoy Halloween Effect Despite Rising Rate Fear?).
Small-Caps
This is a tricky space. The Halloween Effect on Russell 2000 was a gain of 494% versus 373% offered by the S&P 500 from February 1993 through 2010-end. Plus, small-cap securities have historically proven their outperformance in January. Plus, if the Fed enacts a softer rate hike in December, risk-on sentiments should bounce back. These factors put the focus on the small-cap ETF SPDR Portfolio S&P 600 Small Cap ETF, which has a Zacks Rank #2.
Industrials
Industrial stocks historically yielded encouraging returns from December to May. However, the Industrial Select Sector SPDR Fund has outperformed the S&P 500 this year. Biden’s huge infrastructure plan is a positive for the space. Notably, production levels at U.S. factories rose for the third straight month in September, driven by growth in manufacturing activity, which has been bolstered by higher demand for consumer goods. The fund XLI has a Zacks Rank #2.
Why Haven’t You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.