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The S&P 500 has reached another record despite the hotter-than-expected inflation data. The strong trend is likely to continue on the Fed rate cut bets, stronger earnings and the AI boom. In order to tap this opportune moment, investors should bet on ETFs that track the S&P 500 Index, which include SPDR S&P 500 ETF Trust (SPY - Free Report) , iShares Core S&P 500 ETF (IVV - Free Report) , Vanguard S&P 500 ETF (VOO - Free Report) and SPDR Portfolio S&P 500 ETF (SPLG - Free Report) .
The 17th all-time high of 2024 came after the Consumer Price Index grew at an annual rate of 3.2% in February, marginally up from the 3.1% increase reported in January and the 3.1% rise expected by economists. Market participants expect the mild increase in inflation numbers not to impact the Fed's decision of a rate cut in June. According to the CME-Fed Watch tool, future bets on interest rate cuts in June rose to 62.4% on Mar 12 from 59.6% on Mar 11.
The latest data on job numbers also bolstered the expectations for rate cuts by the middle of this year. The economy added 275,0000 jobs in February, higher than the 200,0000 growth forecast. The unemployment rate rose to 3.9% in February after staying at 3.7% for three straight months, while wage growth slowed to 0.1% on a monthly basis.
Last week, the Federal Reserve Chair Jerome Powell told a U.S. Senate committee that the central bank is “not far" from being confident that inflation is declining toward the 2% target, which would make rate cuts possible. Powell noted that inflation had “eased substantially” since hitting a 40-year high in 2022, but policymakers still needed “greater confidence” in its continued decline before cutting rates. He added that there are risks of keeping monetary policy tight for too long and damaging an ongoing economic expansion that has sustained a below 4% unemployment rate for two years (read: S&P 500 Soars to New Highs: 5 Best Stocks YTD).
Meanwhile, earnings are expected to be strong for 2024. Earnings for the S&P 500 Index are expected to rise 11.3% on revenue growth of 4.9%, per an Earnings Trends report. Further, the craze for AI is anticipated to continue in 2024, with many experts believing that the AI journey for market leaders has just begun and more innovations in this field will unfold.
SPDR S&P 500 ETF Trust tracks the S&P 500 Index and holds 503 stocks in its basket, with each accounting for no more than 7.1% of the assets. SPDR S&P 500 ETF Trust is heavy on the information technology sector, whereas financials, healthcare and consumer discretionary round off the next three spots with a double-digit allocation each.
SPDR S&P 500 ETF Trust charges investors 9 bps in annual fees and trades in an average daily volume of 64 million shares. It has an AUM of $500.7 billion and a Zacks ETF Rank #3 (Hold), with a Medium risk outlook (read: S&P 500 ETF Tops $500B in AUM).
With an AUM of $450 million, iShares Core S&P 500 ETF is much smaller than SPY and less liquid, trading in an average daily volume of 4.8 million shares. It charges just 3 bps in annual fees, 6 bps less than the State Street product. iShares Core S&P 500 ETF has a Zacks ETF Rank #1 (Strong Buy), with a Medium risk outlook.
Vanguard S&P 500 ETF also directly tracks the S&P 500 Index and holds 505 stocks in its basket. It has amassed $424.4 billion in its asset base and charges investors 3 bps in annual fees. Vanguard S&P 500 ETF trades in an average daily volume of 5 million shares and has a Zacks ETF Rank #1, with a Medium risk outlook (read: 5 ETFs That Gained Investors Love in February).
SPDR Portfolio S&P 500 ETF follows the S&P 500 Index and holds 503 stocks in its basket, with a 0.02% expense ratio. It has amassed $33 billion in its asset base and trades in a solid volume of 8 million shares a day, on average. SPDR Portfolio S&P 500 ETF has a Zacks ETF Rank #1.
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Ride the S&P 500 Wave With These ETFs
The S&P 500 has reached another record despite the hotter-than-expected inflation data. The strong trend is likely to continue on the Fed rate cut bets, stronger earnings and the AI boom. In order to tap this opportune moment, investors should bet on ETFs that track the S&P 500 Index, which include SPDR S&P 500 ETF Trust (SPY - Free Report) , iShares Core S&P 500 ETF (IVV - Free Report) , Vanguard S&P 500 ETF (VOO - Free Report) and SPDR Portfolio S&P 500 ETF (SPLG - Free Report) .
The 17th all-time high of 2024 came after the Consumer Price Index grew at an annual rate of 3.2% in February, marginally up from the 3.1% increase reported in January and the 3.1% rise expected by economists. Market participants expect the mild increase in inflation numbers not to impact the Fed's decision of a rate cut in June. According to the CME-Fed Watch tool, future bets on interest rate cuts in June rose to 62.4% on Mar 12 from 59.6% on Mar 11.
The latest data on job numbers also bolstered the expectations for rate cuts by the middle of this year. The economy added 275,0000 jobs in February, higher than the 200,0000 growth forecast. The unemployment rate rose to 3.9% in February after staying at 3.7% for three straight months, while wage growth slowed to 0.1% on a monthly basis.
Last week, the Federal Reserve Chair Jerome Powell told a U.S. Senate committee that the central bank is “not far" from being confident that inflation is declining toward the 2% target, which would make rate cuts possible. Powell noted that inflation had “eased substantially” since hitting a 40-year high in 2022, but policymakers still needed “greater confidence” in its continued decline before cutting rates. He added that there are risks of keeping monetary policy tight for too long and damaging an ongoing economic expansion that has sustained a below 4% unemployment rate for two years (read: S&P 500 Soars to New Highs: 5 Best Stocks YTD).
Meanwhile, earnings are expected to be strong for 2024. Earnings for the S&P 500 Index are expected to rise 11.3% on revenue growth of 4.9%, per an Earnings Trends report. Further, the craze for AI is anticipated to continue in 2024, with many experts believing that the AI journey for market leaders has just begun and more innovations in this field will unfold.
ETF Picks
SPDR S&P 500 ETF Trust (SPY - Free Report)
SPDR S&P 500 ETF Trust tracks the S&P 500 Index and holds 503 stocks in its basket, with each accounting for no more than 7.1% of the assets. SPDR S&P 500 ETF Trust is heavy on the information technology sector, whereas financials, healthcare and consumer discretionary round off the next three spots with a double-digit allocation each.
SPDR S&P 500 ETF Trust charges investors 9 bps in annual fees and trades in an average daily volume of 64 million shares. It has an AUM of $500.7 billion and a Zacks ETF Rank #3 (Hold), with a Medium risk outlook (read: S&P 500 ETF Tops $500B in AUM).
iShares Core S&P 500 ETF (IVV - Free Report)
With an AUM of $450 million, iShares Core S&P 500 ETF is much smaller than SPY and less liquid, trading in an average daily volume of 4.8 million shares. It charges just 3 bps in annual fees, 6 bps less than the State Street product. iShares Core S&P 500 ETF has a Zacks ETF Rank #1 (Strong Buy), with a Medium risk outlook.
Vanguard S&P 500 ETF (VOO - Free Report)
Vanguard S&P 500 ETF also directly tracks the S&P 500 Index and holds 505 stocks in its basket. It has amassed $424.4 billion in its asset base and charges investors 3 bps in annual fees. Vanguard S&P 500 ETF trades in an average daily volume of 5 million shares and has a Zacks ETF Rank #1, with a Medium risk outlook (read: 5 ETFs That Gained Investors Love in February).
SPDR Portfolio S&P 500 ETF (SPLG - Free Report)
SPDR Portfolio S&P 500 ETF follows the S&P 500 Index and holds 503 stocks in its basket, with a 0.02% expense ratio. It has amassed $33 billion in its asset base and trades in a solid volume of 8 million shares a day, on average. SPDR Portfolio S&P 500 ETF has a Zacks ETF Rank #1.