Accelerated coronavirus vaccine rollout, solid fiscal stimulus support and reopening of the U.S. economy, which may lead to faster U.S. economic recovery from the pandemic-led slump, have kept investors optimistic so far in the second quarter of 2021.
Notably, the world’s largest economy is strongly controlling the pandemic with accelerated coronavirus vaccine distribution. Per the Centers for Disease Control and Prevention (CDC) data, more than half of the U.S. population has been administered at least one dose of a COVID-19 vaccination, per a CNBC article. A CNN report also stated 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.
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.
Furthermore, there are certain new economic data releases which are pointing toward economic recovery. Notably, the recently-released robust job and manufacturing data majorly boosted market participants' confidence. The Department of Labor reported that the U.S. economy added 559,000 jobs in May compared with an upwardly revised 278,000 payrolls added in April, as mentioned in a CNBC article. However, the consensus estimate stood at 671,000, according to economists surveyed by Dow Jones, per a CNBC article. The unemployment rate slid to 5.8% last month from 6.1% in April. The number also compared favorably with analysts’ estimate of 5.9%, per a CNBC article.
Also, the latest ISM Manufacturing PMI data for the United States is painting a rosy picture for the sector. The ISM Manufacturing PMI read 61.2 in May against 60.7 in April. May’s growth was higher than analysts’ expectations of 60.7. Moreover, manufacturing activity rose for the 12th straight month.
However, investors will be eagerly waiting for the Federal Reserve’s FOMC meeting scheduled for Jun 15-16. Treasury Secretary Janet Yellen’s comment that higher interest rates "would actually be a plus for society's point of view and the Fed's point of view," per
an interview with Bloomberg, are keeping investors on the edge over concerns about interest rate hikes.
Investors may also have to worry about certain factors like increasing inflation levels, tensions surrounding the Fed’s chances of trimming the monetary stimulus earlier than expected and the brewing possibilities of a tax hike in the coming months, per a CNBC article.
Notably, inflation levels rose at the fastest speed since 2008 in April. Notably, the Consumer Price Index rose 4.2% year over year in comparison with the Dow Jones estimate of a 3.6% rise, per a CNBC article. The Producer Price Index in April expanded 6.2% from the year-ago month, representing its biggest expansion in a decade.
The increasing concerns about the U.S. inflation levels continue to dampen U.S. consumer sentiments. Notably, the University of Michigan’s consumer sentiment index declined to 82.9 in May from 88.3 last month. The reading remained mostly flat with May's preliminary reading of 82.8. The metric also remained on par with economists’ forecasts, per a Reuters poll.
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:
Vanguard Mid-Cap ETF ( VO Quick Quote VO - Free Report)
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 $48.68 billion. It charges a fee of 4 basis points (bps) (read:
5 ETFs Most Loved by Investors Last Week). SPDR S&P MIDCAP 400 ETF Trust ( MDY Quick Quote MDY - Free Report)
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 $21.60 billion. It charges a fee of 23 bps (see:
all the Mid Cap ETFs here). First Trust Mid Cap Core AlphaDEX Fund ( FNX Quick Quote FNX - Free Report)
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 $1.03 billion. It charges a fee of 60 bps.
iShares Core S&P Mid-Cap ETF ( IJH Quick Quote IJH - Free Report)
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 $64.59 billion. It charges a fee of 5 bps (read:
5 Top-Ranked Mid-Cap ETFs for Outperformance). Schwab U.S. Mid-Cap ETF ( SCHM Quick Quote SCHM - Free Report)
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 $9.63 billion and charges a fee of 4 bps.
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