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ETFs to Ride Current Market Rally on Solid Economic Data
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Wall Street has again impressed investors with the two major indices hitting record highs. The Dow Jones Industrial Average and the S&P 500 indices rose 0.4% and 0.2%, respectively, to close at all-time highs on Aug 6.
Investors seem to be optimistic about the latest jobs report, which highlights improving employment conditions in the United States. According to the Labor Department, the U.S. economy added 943,000 jobs (the best since August 2020) last month amid surging delta variant woes, as stated in a CNBC article. The metric surpassed the Dow Jones estimates of adding 845,000 jobs in July.
The unemployment rate also declined to 5.4% comparing favorably with the estimate of 5.7%, per a CNBC report. Commenting on the jobs data, Robert Frick, corporate economist at Navy Federal Credit Union, has said that “This not only was a strong jobs report by nearly every measure, it also signals more good things to come,” according to a CNBC article.
Leading global financial holding company, The Goldman Sachs Group, Inc. (GS) has boosted optimism among investors by upgrading its year-end price target for the S&P 500 to 4,700 from the previously-stated 4,300 (per a YahooFinance article). This represents a rise of about 7% from the closing price on Aug 4. Going on, Goldman Sachs has also raised its S&P 500 price target to 4,900 for 2022 from the prior forecast of 4,600. An impressive S&P 500 companies earnings season and a dovish Fed have mostly been the tailwinds behind the revised forecast.
It is worth noting here that the second-quarter earnings season has already seen better-than-expected results, stimulating the rally in stock markets. Per FactSet data, 87% of the S&P 500 companies have reported an earnings surprise (per a CNBC article). Notably, considering the current earnings beat percentage, this might stand out as the best quarter for earnings surprises since 2008, according to a CNBC report.
Going on, the latest development highlighting the bipartisan infrastructure bill of $550 billion, which the Senate introduced on Aug 1, in addition to the previously-approved funds of $450 billion for five years has also brought some optimism. Total spending may go up to $1.2 trillion, if the plan is extended to eight years.
Consumer confidence in the United States also seems impressive as it stays at its highest level since February 2020. The Conference Board's measure of consumer confidence index stands at 129.1 in July, comparing favorably with June’s reading of 128.9. Moreover, July’s reading beat the consensus estimate of the index declining to 123.9, per a Reuters’ poll. Strengthening optimism, coronavirus vaccines have been found to be effective against the delta variant.
Going on, the U.S. GDP grew at a 6.5% annualized rate in the second quarter of 2021, per the Commerce Department’s first estimate (as mentioned in a CNBC article). However, the metric lagged the Dow Jones estimate of 8.4%. Despite missing the estimate, in absolute term, U.S. GDP came in at $19.4 trillion in second-quarter 2021, exceeding $19.2 trillion recorded in fourth-quarter 2019 (the last quarter before the outbreak of coronavirus).
Moreover, the Fed’s continued support with easy monetary policies and fiscal stimulus support are strengthening hopes of rapid recovery from the coronavirus-led slump.
ETFs to Ride the Wave
Investors who seek to capitalize on the strong trends should consider the following ETFs:
This fund seeks to provide investment results that before expenses correspond generally to the price and the yield performance of the S&P 500 Index. Its AUM is $380.88 billion and the total expense ratio, 0.09% (read: ETFs to Play Goldman Sachs' Upbeat S&P 500 Forecast).
The fund seeks to track the investment results of an index composed of large-capitalization U.S. equities. Its AUM is $295.38 billion and the total expense ratio, 0.03% (read: Most Interesting New ETFs of 2021).
The fund seeks to track the performance of the S&P 500 Index. Its AUM is $244.78 billion and the total expense ratio, 0.03% (read: ETF Asset Report of July).
SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report)
The fund seeks to provide investment results that before expenses correspond generally to the price and the yield performance of the Dow Jones Industrial Average. Its AUM is $30.37 billion and the total expense ratio, 0.16% (read: Tesla Beats in Q2 as Indexes Set New Closing Highs).
The fund seeks to track the investment results of a broad-based index composed of U.S. equities. Its AUM is $1.71 billion and the total expense ratio, 0.20%.
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ETFs to Ride Current Market Rally on Solid Economic Data
Wall Street has again impressed investors with the two major indices hitting record highs. The Dow Jones Industrial Average and the S&P 500 indices rose 0.4% and 0.2%, respectively, to close at all-time highs on Aug 6.
Investors seem to be optimistic about the latest jobs report, which highlights improving employment conditions in the United States. According to the Labor Department, the U.S. economy added 943,000 jobs (the best since August 2020) last month amid surging delta variant woes, as stated in a CNBC article. The metric surpassed the Dow Jones estimates of adding 845,000 jobs in July.
The unemployment rate also declined to 5.4% comparing favorably with the estimate of 5.7%, per a CNBC report. Commenting on the jobs data, Robert Frick, corporate economist at Navy Federal Credit Union, has said that “This not only was a strong jobs report by nearly every measure, it also signals more good things to come,” according to a CNBC article.
Leading global financial holding company, The Goldman Sachs Group, Inc. (GS) has boosted optimism among investors by upgrading its year-end price target for the S&P 500 to 4,700 from the previously-stated 4,300 (per a YahooFinance article). This represents a rise of about 7% from the closing price on Aug 4. Going on, Goldman Sachs has also raised its S&P 500 price target to 4,900 for 2022 from the prior forecast of 4,600. An impressive S&P 500 companies earnings season and a dovish Fed have mostly been the tailwinds behind the revised forecast.
It is worth noting here that the second-quarter earnings season has already seen better-than-expected results, stimulating the rally in stock markets. Per FactSet data, 87% of the S&P 500 companies have reported an earnings surprise (per a CNBC article). Notably, considering the current earnings beat percentage, this might stand out as the best quarter for earnings surprises since 2008, according to a CNBC report.
Going on, the latest development highlighting the bipartisan infrastructure bill of $550 billion, which the Senate introduced on Aug 1, in addition to the previously-approved funds of $450 billion for five years has also brought some optimism. Total spending may go up to $1.2 trillion, if the plan is extended to eight years.
Consumer confidence in the United States also seems impressive as it stays at its highest level since February 2020. The Conference Board's measure of consumer confidence index stands at 129.1 in July, comparing favorably with June’s reading of 128.9. Moreover, July’s reading beat the consensus estimate of the index declining to 123.9, per a Reuters’ poll. Strengthening optimism, coronavirus vaccines have been found to be effective against the delta variant.
Going on, the U.S. GDP grew at a 6.5% annualized rate in the second quarter of 2021, per the Commerce Department’s first estimate (as mentioned in a CNBC article). However, the metric lagged the Dow Jones estimate of 8.4%. Despite missing the estimate, in absolute term, U.S. GDP came in at $19.4 trillion in second-quarter 2021, exceeding $19.2 trillion recorded in fourth-quarter 2019 (the last quarter before the outbreak of coronavirus).
Moreover, the Fed’s continued support with easy monetary policies and fiscal stimulus support are strengthening hopes of rapid recovery from the coronavirus-led slump.
ETFs to Ride the Wave
Investors who seek to capitalize on the strong trends should consider the following ETFs:
SPDR S&P 500 ETF Trust (SPY - Free Report)
This fund seeks to provide investment results that before expenses correspond generally to the price and the yield performance of the S&P 500 Index. Its AUM is $380.88 billion and the total expense ratio, 0.09% (read: ETFs to Play Goldman Sachs' Upbeat S&P 500 Forecast).
iShares Core S&P 500 ETF (IVV - Free Report)
The fund seeks to track the investment results of an index composed of large-capitalization U.S. equities. Its AUM is $295.38 billion and the total expense ratio, 0.03% (read: Most Interesting New ETFs of 2021).
Vanguard S&P 500 ETF (VOO - Free Report)
The fund seeks to track the performance of the S&P 500 Index. Its AUM is $244.78 billion and the total expense ratio, 0.03% (read: ETF Asset Report of July).
SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report)
The fund seeks to provide investment results that before expenses correspond generally to the price and the yield performance of the Dow Jones Industrial Average. Its AUM is $30.37 billion and the total expense ratio, 0.16% (read: Tesla Beats in Q2 as Indexes Set New Closing Highs).
iShares Dow Jones U.S. ETF (IYY - Free Report)
The fund seeks to track the investment results of a broad-based index composed of U.S. equities. Its AUM is $1.71 billion and the total expense ratio, 0.20%.