The market’s start to this week has been disappointing. The S&P 500 and Dow Jones Industrial Average indices witnessed a 1% and 0.1% decline, respectively, on May 10. The Nasdaq Composite also lost 2.5% on the day. The weakness was observed as investors exited major tech players and growth picks amid intensifying fears of increasing inflation and rising interest rates, per a CNBC article.
Big Tech players like Microsoft (
MSFT Quick Quote MSFT - Free Report) and Apple ( AAPL Quick Quote AAPL - Free Report) were down more than 2% each on May 10. Facebook ( FB Quick Quote FB - Free Report) also slid more than 4%, while Amazon ( AMZN Quick Quote AMZN - Free Report) and Netflix ( NFLX Quick Quote NFLX - Free Report) lost more than 3% on the same trading day. Alphabet (GOOGL) also lost more than 2% following a downgrade by Citigroup, per a CNBC article.
Wall Street witnessed the above-mentioned weakness after investors continued to show optimism despite a disappointing April jobs report. According to the Labor Department, nonfarm payrolls rose only 266,000 last month. The metric lags the Dow Jones estimate of 1 million, per a CNBC article. It also missed the downwardly revised figure of a rise to 770,000 in March from the previously-stated number of 916,000. Moving on, the U.S. unemployment rate came in at 6.1% during April, in comparison with the Dow Jones estimate of 5.8%, per the same CNBC article. It is worth noting here that expectations of a continued dovish stance to be maintained by the Fed along with the bond-purchasing program kept investors upbeat, per the verified sources.
The U.S. economy is appearing to be on the path of recovery from the pandemic-led slowdown. Markedly, accelerated vaccine distribution, strong fiscal stimulus support and the reopening of non-essential businesses are expected to fasten the economic recovery pace. Notably, the central bank has raised its economic growth outlook considering the vaccine and stimulus optimism and it also expects higher inflation this year.
Furthermore, there are certain recent economic data releases which are pointing toward economic recovery.The U.S. economy grew an annualized 6.4% in the first quarter of 2021, breezing past expectations of 6.1% following a 4.3% uptick in the previous three-month period. Apart from the reopening-driven third-quarter jump last year, the latest reading marked the best period for GDP since the third quarter of 2003.
The most recent U.S. consumer confidence data looks encouraging as the metric rose for the second consecutive month in April. Markedly, the metric hit a one-year high in March. The Conference Board's measure of consumer confidence index stands at 121.7 for April, comparing favorably with March’s revised reading of 109. Moreover, April’s reading beat the consensus estimate of 113, per a Reuters’ poll.
Strengthening the optimism, the United States administered around 200 million doses of vaccines under 100 days of Biden administration, per a CNN report. According to the U.S. Centers for Disease Control and Prevention (CDC), more than half of American adults received at least one vaccine dose, per a Reuters article. Going on, the country is now also witnessing a decline in daily new coronavirus infection cases count.
Mid-Cap ETFs to Consider
As such, investors seeking to capitalize on the strong fundamentals but worried about uncertainty should consider mid-cap ETFs. Below, we have presented five popular mid-cap ETFs:
iShares Core S&P Mid-Cap ETF ( IJH Quick Quote IJH - Free Report) — up 19.2% year to date
The fund seeks to track the investment results of an index composed of mid-capitalization U.S. equities and tracks the S&P MidCap 400 Index. It has AUM of $65.13 billion. It charges a fee of 5 basis points (bps). It has a Zacks ETF Rank #2 (Buy), with a Medium-Risk outlook (read:
5 Top-Ranked Mid-Cap ETFs for Outperformance). SPDR S&P MIDCAP 400 ETF Trust ( MDY Quick Quote MDY - Free Report) — up 19%
The fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P MidCap 400 Index. It has AUM of $21.92 billion. It charges a fee of 23 bps. It has a Zacks ETF Rank #2, with a Medium-Risk outlook (see:
all the Mid Cap ETFs here). First Trust Mid Cap Core AlphaDEX Fund ( FNX Quick Quote FNX - Free Report) — up 18.3%
The fund seeks investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the NASDAQ AlphaDEX Mid Cap Core Index. It has AUM of $10.07 billion. It charges a fee of 60 bps. It has a Zacks ETF Rank #2, with a Medium-Risk outlook (read:
Stimulus to Prop Up Market: Beaten Down ETFs to Buy). Schwab U.S. Mid-Cap ETF ( SCHM Quick Quote SCHM - Free Report) — up 13.9%
The fund’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Mid-Cap Total Stock Market Index. It has AUM of $9.45 billion and charges a fee of 4 bps. It has a Zacks ETF Rank #3 (Hold), with a Medium-Risk outlook.
Vanguard Mid-Cap ETF ( VO Quick Quote VO - Free Report) — up 12%
The fund seeks to track the performance of the CRSP US Mid Cap Index, which measures the investment return of mid-capitalization stocks. It has AUM of $47.59 billion. It charges a fee of 4 bps. It has a Zacks ETF Rank #2, with a Medium-Risk outlook.
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