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Thanks to the surging technology sector and broad market rally, the tech heavy Nasdaq Composite Index topped the major milestone of 6,000 for the first time in Tuesday’s trading session. This represents the first 1000-point move since the dot-com era in early March 2000. Notably, the index gained nearly 12% in the year-to-date timeframe, nearly double the returns of the Dow Jones and S&P 500.
Tech Surge
Most of the surge came from five technology giants – Amazon (AMZN - Free Report) , Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report) and Facebook – that collectively account for 40% weight in the index. These stocks are scaling new highs this year and are the major beneficiaries of Trump's proposed policies, especially the tax reform, which could allow companies to bring back cash being held overseas at lower rates. As promised, the President is expected to announce a big tax reform and tax reduction today (read: 5 Hottest Tech ETFs of 2017).
Additionally, the emergence of new technology such as cloud computing, big data, Internet of Things, wearables, VR headsets, drones and virtual reality devices are fueling growth in the sector. With the global economy picking up momentum, technology companies are likely to outperform and are less susceptible to interest rates or deregulation.
Moreover, the tech sector is expected to be the second largest contributor to record Q1 earnings growth in many years, trailing finance. It will likely post earnings growth of 11.2%, per the latest Earnings Preview.
Broad Market Rally
Part of the upside also came from the broader market rally on continued political relief from the outcome of the first round of the French presidential election, which has eased fears of a populist rise. Further, solid earnings have been driving the market higher. In particular, big companies outside the technology sector such as fast food chain McDonald (MCD - Free Report) and construction machinery maker Caterpillar (CAT - Free Report) helped the Nasdaq to outperform yesterday (read: 5 European ETFs Soaring on French Election Results).
Given this, investors seeking to ride the Nasdaq bull could consider the following ETFs. These funds might see smooth trading and massive trading volumes in the days ahead if the trend persists.
This ETF provides exposure to the 107 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq-100 Index. QQQ is one of the largest and the most popular ETF in the large cap space with AUM of $47.5 billion and average daily volume of around 21.2 million shares. It charges investors 20 bps in annual fees and has surged 14.3% so far this year. The fund has a Zacks ETF Rank of 1 or ‘Strong Buy’ with a Medium risk outlook.
First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW - Free Report)
Holding 107 stocks, this fund provides equal exposure to stocks of the Nasdaq-100 Index. The fund has amassed $510.8 million in its asset base while it trades in lower volumes of nearly 56,000 shares a day on average. It charges 60 bps in annual fees and has gained 13.6% in the year-to-date timeframe. QQEW also has a Zacks ETF Rank of 1 with a Medium risk outlook (read: Top-Ranked ETFs That Crushed S&P 500 in the Bull Market).
Fidelity Nasdaq Composite Index Tracking Stock (ONEQ - Free Report)
This ETF tracks the Nasdaq Composite Index, holding a broad basket of 2042 stocks. It has AUM of over $1 billion and average daily volume of around 33,000 shares. The expense ratio comes in at 0.21%. The product has gained 12.3% in the year-to-date frame and has a Zacks ETF Rank of 3 or ‘Hold’ with a Medium risk outlook.
Investors seeking to make big gains in a short span could make a play on QLD. It provides two times the return of the daily performance of the NASDAQ-100 Index and exchanges 879,000 shares in hand on average. The fund has AUM of $1.1 billion and charges 95 bps in fees and expenses. It has surged 29.6% so far this year (read: Can 2017 Be a Year of Nasdaq ETFs?).
For a more bullish approach, TQQQ could be excellent choice. It also tracks the NASDAQ-100 Index but offers three times the returns of the daily performance with the same expense ratio of QLD. It has managed AUM of $1.4 billion and sees 2.5 million more in average daily volume. TQQ had returned 47% in the year-to-date timeframe.
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5 Must-Watch ETFs as Nasdaq Hits 6,000
Thanks to the surging technology sector and broad market rally, the tech heavy Nasdaq Composite Index topped the major milestone of 6,000 for the first time in Tuesday’s trading session. This represents the first 1000-point move since the dot-com era in early March 2000. Notably, the index gained nearly 12% in the year-to-date timeframe, nearly double the returns of the Dow Jones and S&P 500.
Tech Surge
Most of the surge came from five technology giants – Amazon (AMZN - Free Report) , Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report) and Facebook – that collectively account for 40% weight in the index. These stocks are scaling new highs this year and are the major beneficiaries of Trump's proposed policies, especially the tax reform, which could allow companies to bring back cash being held overseas at lower rates. As promised, the President is expected to announce a big tax reform and tax reduction today (read: 5 Hottest Tech ETFs of 2017).
Additionally, the emergence of new technology such as cloud computing, big data, Internet of Things, wearables, VR headsets, drones and virtual reality devices are fueling growth in the sector. With the global economy picking up momentum, technology companies are likely to outperform and are less susceptible to interest rates or deregulation.
Moreover, the tech sector is expected to be the second largest contributor to record Q1 earnings growth in many years, trailing finance. It will likely post earnings growth of 11.2%, per the latest Earnings Preview.
Broad Market Rally
Part of the upside also came from the broader market rally on continued political relief from the outcome of the first round of the French presidential election, which has eased fears of a populist rise. Further, solid earnings have been driving the market higher. In particular, big companies outside the technology sector such as fast food chain McDonald (MCD - Free Report) and construction machinery maker Caterpillar (CAT - Free Report) helped the Nasdaq to outperform yesterday (read: 5 European ETFs Soaring on French Election Results).
Given this, investors seeking to ride the Nasdaq bull could consider the following ETFs. These funds might see smooth trading and massive trading volumes in the days ahead if the trend persists.
PowerShares QQQ (QQQ - Free Report)
This ETF provides exposure to the 107 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq-100 Index. QQQ is one of the largest and the most popular ETF in the large cap space with AUM of $47.5 billion and average daily volume of around 21.2 million shares. It charges investors 20 bps in annual fees and has surged 14.3% so far this year. The fund has a Zacks ETF Rank of 1 or ‘Strong Buy’ with a Medium risk outlook.
First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW - Free Report)
Holding 107 stocks, this fund provides equal exposure to stocks of the Nasdaq-100 Index. The fund has amassed $510.8 million in its asset base while it trades in lower volumes of nearly 56,000 shares a day on average. It charges 60 bps in annual fees and has gained 13.6% in the year-to-date timeframe. QQEW also has a Zacks ETF Rank of 1 with a Medium risk outlook (read: Top-Ranked ETFs That Crushed S&P 500 in the Bull Market).
Fidelity Nasdaq Composite Index Tracking Stock (ONEQ - Free Report)
This ETF tracks the Nasdaq Composite Index, holding a broad basket of 2042 stocks. It has AUM of over $1 billion and average daily volume of around 33,000 shares. The expense ratio comes in at 0.21%. The product has gained 12.3% in the year-to-date frame and has a Zacks ETF Rank of 3 or ‘Hold’ with a Medium risk outlook.
ProShares Ultra QQQ (QLD - Free Report)
Investors seeking to make big gains in a short span could make a play on QLD. It provides two times the return of the daily performance of the NASDAQ-100 Index and exchanges 879,000 shares in hand on average. The fund has AUM of $1.1 billion and charges 95 bps in fees and expenses. It has surged 29.6% so far this year (read: Can 2017 Be a Year of Nasdaq ETFs?).
ProShares UltraPro QQQ (TQQQ - Free Report)
For a more bullish approach, TQQQ could be excellent choice. It also tracks the NASDAQ-100 Index but offers three times the returns of the daily performance with the same expense ratio of QLD. It has managed AUM of $1.4 billion and sees 2.5 million more in average daily volume. TQQ had returned 47% in the year-to-date timeframe.
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 >>