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ETF Strategies to Play the Drop in New US COVID-19 Cases

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The world’s largest economy is strongly controlling the coronavirus outbreak with accelerated coronavirus vaccine distribution. According to data from Johns Hopkins University, the daily average of new cases declined to roughly 17,248 as of May 31 (per a CNN report).

Notably, Wall Street had an encouraging run on the bourses in May despite rising inflation levels. The Dow Jones Industrial Average rose 1.93% last month. Moreover, there was a 0.55% increase in the S&P 500 Index during May. Both the broader indices saw their fourth straight positive month.

The decline in the number of coronavirus cases has increased optimism among market participants toward faster recovering and reopening of the U.S. economy. According to the Centers for Disease Control and Prevention (CDC) data, more than half the U.S. population has been administered at least one dose of a COVID-19 vaccination, per a CNBC article. A CNN report also states that 12 states have touched President Joe Biden’s target to vaccinate 70% of adults, with at least one dose of coronavirus vaccine by Jul 4, per the CDC.

An increasing number of people are expected to travel and go for vacations starting the Memorial Day weekend, which is also considered the unofficial beginning of the summer travel season, according to the same CNBC article. In fact, the Transportation Security Administration has informed about screening an average of 1.78 million people from May 28 through May 31, significantly above the year-ago volumes, per a CNBC article. The data highlights U.S. air travel touching a pandemic-era high. However, these volumes are still 22% below 2019’s Memorial Day weekend, according to a CNBC article.

Going on, the latest public health guidelines issued by the CDC have relaxed restrictions on wearing masks at indoor and public gatherings. According to the new recommendations, completely vaccinated people do not need to wear masks or stay six feet away from others at indoor or outdoor gatherings, per a CNBC article.

Moreover, a change in consumer behavior and shopping patterns is being observed as Americans are visiting stores for shopping merchandise like new clothes which signal toward normalcy. Large retailers like Walmart (WMT), Target (TGT), Home Depot and Macy’s have been gaining from the reopening economy and gradual return to normalcy.

ETF Strategies to Follow

Here we discuss certain ETF strategies to help investors gain from optimism surrounding the chances of another trench of coronavirus-aid package and improved coronavirus vaccine rollout.

Momentum ETFs to Consider

While the broader stock market is expected to gain on optimism surrounding the rebounding U.S. economy and positive developments in coronavirus vaccine research, momentum investing will likely take centerstage as investors seek greater returns in the short term. Momentum investing looks to fetch profits from hot stocks that have shown an uptrend over the past few weeks or months. Investors can consider iShares Edge MSCI USA Momentum Factor ETF (MTUM - Free Report) , Invesco DWA Momentum ETF (PDP - Free Report) , Invesco S&P MidCap Momentum ETF (XMMO - Free Report) , VictoryShares USAA MSCI USA Value Momentum ETF (ULVM) and SPDR Russell 1000 Momentum Focus ETF (ONEO) (read: New Momentum ETF (QQQA) Hits the Market).

Growth ETFs to Play

Growth stocks are generally expected to witness a positive revenue and earnings trend at a faster rate than the industry average. As such, growth funds tend to outperform during an uptrend. While there are several options in the growth ETF world, we have highlighted five funds that offer broad-based exposure to the U.S. stock market like Vanguard Growth ETF (VUG - Free Report) , Schwab U.S. Large-Cap Growth ETF (SCHG - Free Report) , iShares Core S&P U.S. Growth ETF (IUSG - Free Report) , SPDR S&P 500 Growth ETF (SPYG) and Vanguard Mega Cap Growth ETF (MGK) (read: 5 Top-Ranked ETFs to Ride on a Booming Economy).

Small-Cap ETFs to Look Out For

Small-cap stocks, as indicated by the Russell 2000 Index, have been outperforming the broader market and hitting new all-time highs in the recent past. In fact, the Russell 2000 index climbed 0.11% in May witnessing its eighth consecutive positive month. The index also saw its longest monthly win since 1995. This upside is being largely led by small-cap companies that are closely tied to the U.S. economy and are thus well-positioned to outperform when the economy improves. The latest release of economic data is also indicating toward an improving economy. Therefore, investors can consider Schwab U.S. Small-Cap ETF (SCHA - Free Report) , SPDR S&P 600 Small Cap ETF (SLY - Free Report) , Vanguard S&P Small-Cap 600 ETF (VIOO - Free Report) and John Hancock Multifactor Small Cap ETF (JHSC) (read: A Spread of Small-Cap ETFs Touching New Heights).

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