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ETF Sectors to Bet on Positive Vaccine News

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The aggravating coronavirus outbreak in the United States and globally is definitely increasing the desperation for a vaccine. Going by Johns Hopkins University data, the United States witnessed the highest new COVID-19 fatalities numbers since May on Nov 24 (per a CNN report). The world’s largest economy has now seen 12,591,163 confirmed cases and 259,925 deaths.

Given that the Thanksgiving week has begun and people are not following guidelines against holiday travel, the United States is expected to see an exponential rise in cases in the days following Thanksgiving, according to a CNN medical analyst Dr. Jonathan Reiner (per a CNN article).

Thus, considering the concerning scenario marked by the COVID-19 spread and fatalities, positive news related to coronavirus vaccine and treatment is definitely lifting the market.

The Dow Jones Industrial Average crossed the 30,000-mark for the first time on Nov 24. Among the major gainers were plane-maker Boeing, increasing 3.3%, and oil company Chevron which was up 5%. Investment banks Goldman Sachs and JPMorgan Chase also rose 3.8% and 4.6%, respectively. Other major gainers included Disney, American Express and IBM.

Positive COVID-19 Vaccine Updates Instil Optimism

AstraZeneca has announced that an interim analysis of clinical trials reflected that its coronavirus vaccine delivered an average efficacy of 70% in protecting against coronavirus. Notably, the vaccine was evaluated over two different dosing schedules.

Another frontrunner in the coronavirus vaccine race — Moderna (MRNA) — has come up with encouraging study data relating to mRNA-1273. National Institutes of Health -appointed Data Safety Monitoring Board (DSMB) for the Phase 3 study of mRNA-1273 has informed Moderna that with a vaccine efficacy of 94.5%, the trial has met the pre-mentioned statistical parameter in the study protocol for efficacy.

Pfizer Inc. (PFE) and BioNTech SE (BNTX) have again come up with encouraging updates regarding their coronavirus vaccine candidate, BNT162b2. Notably, BNT162b2 has been found to meet all of the ongoing Phase 3 study’s primary efficacy endpoints post the final efficacy analysis. The data reflects a vaccine efficacy rate of 95% (p<0.0001) in study participants without prior SARS-CoV-2 infection (first primary objective) and also in participants with and without prior SARS-CoV-2 infection (second primary objective), which were measured seven days after the second dose in both cases.

Meanwhile, we note that several other pharma bigwigs and biotech companies are progressing in developing a coronavirus vaccine using different technologies. Pharma giant, J&J (JNJ) is developing its vaccine candidate in a phase III study. Glaxo and Sanofi have partnered to develop a coronavirus vaccine. The companies expect to initiate a phase III study on their adjuvanted coronavirus vaccine candidate by 2020-end. Two biotechs that are also strongly moving with their coronavirus vaccine development are Inovio Pharmaceuticals and Novavax.

ETF Sectors to Bet On

The introduction of the coronavirus vaccine is expected to help in the economic recovery, especially for sectors which have taken a deep hit from the social-distancing and lockdown measures. Here we highlight safe ETF sectors that are going to be the main beneficiaries from the vaccine introduction:

Biotech ETFs

The biotechnology sector has kept its promise of returns so far. From vaccine-related positive news to progress in the development of cell therapies for addressing coronavirus, all kept the sector surging. Notably, the race to introduce vaccine and treatment of coronavirus is opening up opportunities, making the biotech sector a prospective space for investments. Therefore, we highlight a few ETFs that might gain in such a scenario like iShares Nasdaq Biotechnology ETF (IBB - Free Report) , SPDR S&P Biotech ETF (XBI - Free Report) , First Trust NYSE Arca Biotechnology ETF (FBT - Free Report) , ARK Genomic Revolution ETF (ARKG) and VanEck Vectors Biotech ETF (BBH) (read: Moderna ETFs to Shine on Vaccine News as Outbreak Worsens).

Automobile ETF

The coronavirus outbreak has affected production and sales of vehicles as carmakers had to shut down facilities in late March across the United States. The outbreak also slowed down the sector’s sales, with demand being hit hard by high unemployment rates. However, with many states having eased restrictions, automakers have restarted operations but under some restrictions for controlling the spread of infections.

Moreover, the pandemic has resulted in changes in the demand and preferences of consumers who are currently showing more interest in purchasing their own vehicles, largely due to concerns about public transportation systems and willingness for road trips. Thus, the vaccine introduction will help in further accelerating demand within the sector. In such a scenario, investors can consider First Trust NASDAQ Global Auto ETF (CARZ - Free Report) (read: 5 Must-Watch ETF Charts After Q3 Earnings).

Airline ETF

The coronavirus outbreak has hammered the U.S. airline sector. The virus’ spread resulted in declining air travel, with restrictions imposed by the government. Consequently, airlines’ top lines suffered a material impact as passenger revenues form the largest component of their total revenue base. Looking at the stressed balance sheets of the carriers, it will be safe to say that the sector will surely get a boost from vaccine development. U.S. Global Jets ETF (JETS - Free Report) is a popular ETF for exposure to the global airline industry, including airline operators and manufacturers from all over the world (read: Celebrate Thanksgiving Week With These ETFs).

Bank ETFs

The banking industry suffered heavy blows from the coronavirus outbreak. However, the ramp-up in economic activities can offset this downside for the banking sector. Also, with support from the central bank, hopes of a further stimulus by the Congress and vaccine introduction creating demand, banks are expected to fare well in the near term. To tap this opportunity, investors can opt for Invesco KBW Bank ETF (KBWB - Free Report) , SPDR S&P Regional Banking ETF (KRE - Free Report) , iShares U.S. Regional Banks ETF (IAT) and SPDR S&P Bank ETF (KBE) (read: ETFs Riding the Latest Coronavirus Vaccine Optimism Wave).

Energy ETFs

The pandemic has dealt a heavy blow to the energy sector. Dented global energy demand and oversupply have also been hurting the sector for long. The outbreak has forced operators to cut costs significantly by suspending some of their major activities as well as trimming workforce. However, vaccine introduction can bring back the strength in the energy sector as economic activities will resume and demand will be created for oil. Thus, investors can consider betting on Energy Select Sector SPDR (XLE - Free Report) , SPDR S&P Oil & Gas Equipment & Services ETF (XES - Free Report) , VanEck Vectors Oil Services ETF (OIH) and iShares U.S. Oil Equipment & Services ETF (IEZ) (read: Time to Rotate to Cyclical Sector ETFs?).

Leisure & Entertainment ETFs

Cruises, entertainment and theme parks, theatre halls, and hotels and holiday resorts have been strongly hit by the coronavirus outbreak as it forced people to remain indoors and look for in-house mode of entertainments. However, the introduction of vaccine will help in resuming normal in life, with huge crowds opting for these outdoor entertainment options. Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report) and ETFMG Travel Tech ETF (AWAY) are worth considering here (read: Leisure Stocks & ETFs Rally on Strong Vaccine Hopes).

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