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Winning Sector ETFs on Biden's First 100 Days of Ruling

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President Joe Biden’s first 100 days of ruling has turned out as a blessing for Wall Street, better than any of his forerunners going back to the 1950s, per a CNBC article. The rollout of $1.9-trillion of COVID-19 stimulus package — including dolling out of $1,400-stimulus checks, the announcement of $2.3-trillion worth of infrastructure plan, joining of Paris Climate Change agreement in support for a green economy and a massive push for coronavirus vaccination — are some of the measures that Biden resorted to in the first 100 days in office.

The S&P 500 has jumped 24.1% since Inauguration Day — more appropriately 103 days ago. Kennedy’s record takes the second spot with 18.5% S&P 500 return, followed by H.W.Bush’s presidency with about 12.5% stock market gains and the Trump’s administration 11.4% return in the first 100 days, the CNBC article noted.

“Biden’s first 100 days have already delivered the strongest post-election equity returns in at least 75 years, due to record fiscal stimulus and despite heavy use of Executive Orders,” JPMorgan Chase strategist John Normand said in a note, as quoted on CNBC.

Why the Superb Rally Took Place?

Some credit may go to easy comparisons as the stock market crashed in March 2020 due to the onset of coronavirus crisis. As a result, the S&P 500 has been logging solid growth thanks to favorable comparison.

Vaccine optimism also started boosting the market mood since the fourth quarter of 2020 on hopes of a sooner-than-expected return to normalcy. Biden’s winning of election, in fact, matched the timeframe of the vaccine rollout.

Meanwhile, more than $5.3 trillion has been shelled out on Covid-related relief efforts, and the Fed’s bond buying program has almost doubled its balance sheet to about $8 trillion. Interest rates have also been at the rock-bottom levels. These measures, along with rapid vaccination (about 3 million Americans per day), boosted consumers’ financial and health security, which in turn reflected on the economic and stock market revival.

Winning Sectors

Against this backdrop, below we highlight a few sectors and the related ETFs that won the most in Biden’s first 100 days of ruling.

Banks

As the stimulus news boosted risk-on sentiments, the 10-year treasury yield rose. With the Fed being super-dovish, the yield curve steepened to its highest since January 2017 this year. The biggest winner of the steepening yield curve has been the banking sector. As banks seek to borrow money at short-term rates and lend at long-term rates, a steepening yield curve earns more on lending and pays less on deposits, thereby leading to a wider spread. This expands net margins and increases banks’ profits.

Bargain hunting also led to some gains. Activity levels in the equity underwriting, M&A and trading has been around record levels. Invesco KBW Bank ETF (KBWB - Free Report) added 17.9% in the said period while Microsectors 3X U.S. Big Banks ETN (BNKU - Free Report) gained about 77%.

Industrials

Investors should note that U.S. manufacturing activities are in decent shape. The reopening of economies and Biden’s infrastructure plan has also been boosting the stock prices of the materials and industrial sectors. In fact, the manufacturing sector has been exhibiting solid job growth (read: 4 Sector ETFs to Sizzle on Robust March Jobs Report).

Industrials Bull 3X Direxion (DUSL - Free Report) is up 54.5% in the past three months and Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) has gained more than 100% in the first 100 days of Biden presidency.Industrial Select Sector SPDR Fund (XLI - Free Report) has gained about 24.4% in the same period.

Transportation

The segment is a beneficiary of economic reopening. Transportation Bull 3X Direxion (TPOR) has advanced about 70% while SPDR S&P Transportation ETF (XTN - Free Report) has gained about 18%.

Real Estate & Homebuilding

The homebuilding sector has been on an upbeat mode with sky-high home prices and extremely low levels of mortgage rates. The fund SPDR S&P Homebuilders ETF (XHB - Free Report) is up about 21%.

Uptick in home prices has helped the rental market. The rise in cost of shelter has favored the real estate stocks and ETFs. The moderate inflation trend also points to the fact that rates are going to rise in the coming days at a moderate pace, which proved as a plus for the rate-sensitive real estate sector. Real Estate Select Sector SPDR ETF XLRE) has added 16.2% while Real Estate Bull 3X Direxion (DRN) is up about 40% (read: 4 Reasons Why Real Estate ETFs Could be Tapped Now).

Aerospace Defense

The commercial aviation market has been recovering from the coronavirus-related slump while exposure to the defense sector always gives the Aerospace & Defensesector protection from the downside risks. iShares U.S. Aerospace & Defense ETF (ITA - Free Report) is up 11.8% since inauguration and Aerospace Defense Bull 3X Direxion (DEFN) is up about 45%.

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