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ETFs to Play S&P 500's Best Inauguration Day Since 1985

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Wall Street was fully charged up on the U.S. Presidential Inauguration day held on Jan 20. The S&P 500, in fact, recorded its best Inauguration Day return (up 1.39%) since Ronald Reagan’s second inauguration in 1985, according to an analysis by LPL Financial, as quoted on Yahoo Finance. The index’s gain from Election Day to Inauguration Day was its best ever, with the S&P 500 returning more than 14% between Nov 3 and Jan 20’s close.

The markets probably rallied on because Biden started his term by signing a number of executive orders to counter the ill effects of the COVID-19 pandemic, empower environmental protection initiatives and roll back many of the Trump administration’s immigration policies.

The likelihood of the additional stimulus has driven the pre-Inauguration surge in the market. Notably, President-elect Joe Biden’s “Rescue America” plan favors a COVID-19 relief package worth up to $1.9 trillion. The size of the stimulus package is way larger than the $1.3 trillion plan that the soon-to-be Senate Majority Leader Chuck Schumer, a Democrat from New York, was backing, according to Bloomberg, as quoted on Fox Business.

Biden’s plan includes $400 billion for coronavirus management, a trillion dollars of direct coronavirus relief (which comprises supplemental $1,400 relief checks to round out to the promised $2,000), and $440 billion in aid to communities and businesses (read: Biden Favors $1.9T COVID Stimulus: ETFs to Win/Lose).

S&P 500 to Touch 4,100?

Since markets have been riding on fiscal and monetary stimulus hope, the S&P 500 should rally higher. In any case, the S&P 500 has gained 10.4% annually on average when a Democrat has been in office compared with a 6.6% return under Republican leadership. The S&P 500 has performed better in down years too, with the average annual decline being 9.5% versus a 13.9% drop-off for a Republican president, according to BMO Capital, per a Yahoo Finance article.

RBC Capital Markets launched a price target of 4,100 on the S&P 500 for 2021, implying about 6.4% upside from Wednesday’s close. Against this backdrop, we highlight below a few S&P 500 ETFs (read: Investing Strategies to Follow on Democratic Senate and House).

Vanguard S&P 500 ETF (VOO - Free Report)

The underling S&P 500 Index measures the performance of the large-capitalization sector of the U.S. equity market. The fund has a Zacks ETF Rank #2 (Buy). It yields 1.88% annually and charges only 3 bps in fees.

iShares Core S&P 500 ETF (IVV - Free Report)

The S&P 500 Index measures the performance of the large-capitalization sector of the U.S. equity market. The Zacks Rank #3 fund yields 1.55% annually and charges 3 bps in fees (read: Most Loved and Hated ETFs of 2020).

SPDR Portfolio S&P 500 High Dividend ETF (SPYD - Free Report)

The underlying S&P 500 High Dividend Index is designed to measure the performance of the top 80 dividend-paying securities listed on the S&P 500 Index, based on dividend yield. The Zacks Rank #2 ETF yields 4.69% annually and charges 7 bps in fees.

SPDR Portfolio SP 500 Value ETF (SPYV - Free Report)

The S&P 500 Value Index measures the performance of the large-capitalization value sector in the U.S. equity market. The Zacks Rank #2 fund charges just 4 bps in fees and yields 2.32% annually.

SPDR Portfolio SP 500 Growth ETF (SPYG - Free Report)

The underlying S&P 500 Growth Index measures the performance of the large-capitalization growth sector in the U.S. equity market. The Zacks Rank #1 (Strong Buy) fund charges just 4 bps in fees and yields 0.90% annually. 

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