Investors witnessed another Wall Street rally, with broader indices touching record high levels. The Dow Jones Industrial Average and the S&P 500 rose 0.5% and 0.1%, respectively, to close at record highs. The rally was largely stimulated by the Senate’s approval of President Biden’s $1-trillion infrastructure plan.

The Senate has passed the bipartisan infrastructure bill of $550 billion in addition to the previously-approved funds of $450 billion for five years. Total spending may go up to $1.2 trillion if the plan is extended to eight years. The spending on the infrastructure will help instill more strength in the economy.

In this regard, Courtney Dominguez, senior wealth advisor for Payne Capital Management, has said, "Realistically, what an infrastructure bill is going to mean is additional spending into the economy. Just like the stimulus has helped the economy for the last year, that's more money that can be going into the economy and helping businesses get through the slump they have been in previously," per a YahooFinance article.

Market analysts also seem to be upbeat about the second-quarter earnings season, which has already seen better-than-expected results, stimulating the rally in stock markets. Per FactSet data, 87% of the S&P 500 companies 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.

Moreover, the latest jobs report, which highlights improving employment conditions in the United States, is boosting optimism levels. According to the Labor Department, the U.S. economy added 943,000 jobs (he 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.

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 terms, 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.

ETF Strategies to Follow

Here we discuss certain ETF strategies to help investors gain from optimism surrounding the recovering U.S. economy from the pandemic-led slump despite surging delta variant cases, rising inflation levels and fears of a rise in interest rates.

Play the Momentum ETFs

While the broader stock market is expected to gain on optimism surrounding the rebounding U.S. economy and accelerated distribution of coronavirus vaccine, 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 Quick QuoteMTUM - Free Report) , Invesco DWA Momentum ETF (PDP Quick QuotePDP - Free Report) , Invesco S&P MidCap Momentum ETF (XMMO Quick QuoteXMMO - Free Report) , VictoryShares USAA MSCI USA Value Momentum ETF (ULVM Quick QuoteULVM - Free Report)  and SPDR Russell 1000 Momentum Focus ETF (ONEO) (read: Here's Why Momentum ETFs Are Looking Good Buys).

Growth ETFs to Consider

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 Quick QuoteVUG - Free Report) , Schwab U.S. Large-Cap Growth ETF (SCHG Quick QuoteSCHG - Free Report) , iShares Core S&P U.S. Growth ETF (IUSG Quick QuoteIUSG - Free Report) , SPDR S&P 500 Growth ETF (SPYG) and Vanguard Mega Cap Growth ETF (MGK) (read: ETF Strategies to Cheer the Dovish Fed Minutes).

Small-Cap ETFs to Watch 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. 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 Quick QuoteSCHA - Free Report) , SPDR S&P 600 Small Cap ETF , Vanguard S&P Small-Cap 600 ETF (VIOO Quick QuoteVIOO - Free Report) and John Hancock Multifactor Small Cap ETF (JHSC) (read: Play This New Direxion ETF if You Are Eyeing Penny Stocks).