The broad market index S&P 500 has been impressing investors with a stupendous rally since it hit a pandemic-low in March 2020. The index has gained about 100.2% after it touched an all-time high of 4,479.71 on Aug 16 from a low of 2,237.40, as recorded on Mar 23, 2020.
A CNBC analysis of data from S&P Dow Jones Indices reveals that the S&P 500 index has witnessed the fastest bull-market, doubling off after hitting bottom, going back to the World War II period. The broad market index took only 354 trading days to double from the pandemic-low level, according to a CNBC article. The CNBC’s analysis also highlighted that bull markets generally require more than 1,000 trading days to hit such a milestone. In this regard, Ryan Detrick, chief market strategist at LPL Financial, has also commented that “Usually it takes many years to double, so this is another way of showing just how incredible this bull market has been,” per a CNBC article.
Market analysts continue to remain bullish. JPMorgan analysts have noted that “We remain bullish on stocks (particularly cyclicals/value) thanks to a strong earnings season, signs of receding risk from the delta variant, and normalization of bond-equity correlation,” as mentioned in a CNBC article.
Leading global financial holding company, The Goldman Sachs Group, Inc. (GS), has also 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). An impressive S&P 500 companies’ earnings season and a dovish Fed have mostly been the tailwinds behind the revised forecast.
Investors have remained optimistic on multiple reasons as the U.S. economy is recovering from the pandemic-led slump amid the rising delta variant cases. The impressive second-quarter earnings season, data reflecting moderating inflationary pressure along with solid jobs report for July are some factors keeping the investing environment upbeat.
According to the Labor Department report, the consumer-price index increased 5.4% year over year in July and 0.5% sequentially (per a CNBC article). Also, there was a 0.3% sequential rise in core inflation (excludes energy and food prices) in July along with a 4.3% year-over-year increase.
In this regard, Brad McMillan, chief investment officer at Commonwealth Financial Network, has commented that “Inflation has, at a minimum, paused. For both the headline and core figures, the monthly and annual numbers were stable or down from last month. Based on that data, inflation is certainly not on an unstoppable increase,” according to a CNBC article.
The passage of the bipartisan infrastructure bill of $550 billion in addition to the previously-approved funds of $450 billion for five years by the Senate has also brought in a new wave of optimism, particularly for cyclical sectors like industrials and materials. 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.
Market analysts also seem upbeat about the second-quarter earnings season, which has already seen better-than-expected results, stimulating the rally in stock markets.
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 (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 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.
Moreover, the Fed’s continued support with easy monetary policies and impressive fiscal stimulus spending 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 Quick Quote 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 $388.81 billion and total expense ratio, 0.09% (read:
5 ETFs That Gained Maximum Investor Love Last Week). iShares Core S&P 500 ETF ( IVV Quick Quote IVV - Free Report)
The fund seeks to track the investment results of an index composed of large-capitalization U.S. equities. Its AUM is $300.21 billion and total expense ratio, 0.03% (read:
ETFs to Ride Current Market Rally on Solid Economic Data). Vanguard S&P 500 ETF ( VOO Quick Quote VOO - Free Report)
The fund seeks to track the performance of the S&P 500 Index. Its AUM is $249.41 billion and total expense ratio, 0.03% (read:
ETFs to Play Goldman Sachs' Upbeat S&P 500 Forecast). SPDR Portfolio S&P 500 ETF ( SPLG Quick Quote SPLG - Free Report)
The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P 500 Index. Its AUM is $11.80 billion and total expense ratio, 0.03% (read:
A Spread of Top S&P 500 ETFs to Tap Solid Q2 Earnings Growth). Invesco S&P 500 Top 50 ETF ( XLG Quick Quote XLG - Free Report)
This fund follows the S&P 500 Top 50 Index, which measures the cap-weighted performance of 50 of the largest companies on the S&P 500 Index, reflecting the performance of the U.S. mega-cap stocks. It has been able to manage assets worth $2.09 billion. Expense ratio comes in at 0.20%.