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After a remarkable run in 2020, stocks continued their rally in the first half of 2021. All three major indexes are now trading at or close to their all-time highs, defying fears about valuations and inflation. Per Bloomberg, this was one of the best first halves ever for the S&P 500 index (SPY - Free Report) , which gained 16%.
The Dow Jones (DIA - Free Report) rose 15% and the Nasdaq returned 13% during this period. Looking at sectors, Energy was the biggest gainer, up 46% while Financials jumped 25%. Utilities and Consumer Staples were the worst performers, up between 2% and 3%.
Most strategists believe that the rally will continue into the second half, boosted by strong economic recovery and earnings growth. Per WSJ, whenever the S&P 500 rose between 15% and 18% in the first half, it continued to rise in the second half, but at a slower pace.
Another reason for continuation of stock market rally is the TINA factor: “there is no alternative to stocks.” Stocks look much more attractive compared to most other asset classes in the rock-bottom interest rate environment. Further, concerns about rising inflation also make equities a better investment compared to bonds or cash.
As a result, retail investors have continued to pour money into equities and equity ETFs this year. Goldman Sachs recently raised their forecast for households’ net equity purchases for the full year to $400 billion from $350 billion, per Bloomberg.
The best performing ETFs of the first half are the Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) , the Invesco S&P SmallCap Energy ETF (PSCE - Free Report) and the iPath Series B Carbon ETN (GRN - Free Report) . They have returned 260%, 86% and 71% respectively. To learn more, please watch the short video above. (See: A Deep Dive into the Top Performing ETF)
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Top Performing ETFs of the First Half
After a remarkable run in 2020, stocks continued their rally in the first half of 2021. All three major indexes are now trading at or close to their all-time highs, defying fears about valuations and inflation. Per Bloomberg, this was one of the best first halves ever for the S&P 500 index (SPY - Free Report) , which gained 16%.
The Dow Jones (DIA - Free Report) rose 15% and the Nasdaq returned 13% during this period. Looking at sectors, Energy was the biggest gainer, up 46% while Financials jumped 25%. Utilities and Consumer Staples were the worst performers, up between 2% and 3%.
Most strategists believe that the rally will continue into the second half, boosted by strong economic recovery and earnings growth. Per WSJ, whenever the S&P 500 rose between 15% and 18% in the first half, it continued to rise in the second half, but at a slower pace.
Another reason for continuation of stock market rally is the TINA factor: “there is no alternative to stocks.” Stocks look much more attractive compared to most other asset classes in the rock-bottom interest rate environment. Further, concerns about rising inflation also make equities a better investment compared to bonds or cash.
As a result, retail investors have continued to pour money into equities and equity ETFs this year. Goldman Sachs recently raised their forecast for households’ net equity purchases for the full year to $400 billion from $350 billion, per Bloomberg.
The best performing ETFs of the first half are the Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) , the Invesco S&P SmallCap Energy ETF (PSCE - Free Report) and the iPath Series B Carbon ETN (GRN - Free Report) . They have returned 260%, 86% and 71% respectively. To learn more, please watch the short video above. (See: A Deep Dive into the Top Performing ETF)
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>