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September is historically the worst month of the year for stocks. According to moneychimp.com, a consensus carried out from 1950 to 2020 has revealed that September ended up offering positive returns in 32 years and negative returns in 39 years, with an average return of negative 0.62%, which is worse than any other month.
Terrifying financial events like the start of the Great Depression in 1929 or the fall of Lehman Brothers in 2008 all crept up in the month of September. This September is no different with taper tensions rising in the United States.
China’s regulatory crackdown on the all-important tech sector and last but not the least the fear about the rising Delta variant of COVID-19 have weighed on the market momentum. All these make it more important to pin point ETFs that have the power to navigate such threats.
The real estate corner of the broad market has been an area to watch lately. Low rates caused by the dovish Fed and fears for the delta variant of Covid-19 have been keeping the rates low and boosting the rate-sensitive sectors like real estate.
The rise in cost of shelter is also a plus for the real estate stocks and ETFs. Rising home prices have also boosted the demand for renting. The job market is still far from being steady. This means demand for real estates for rent purpose is likely to remain strong from middle-income or low-income consumers.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
A lot of factors are favoring this sector. Decent consumer confidence level, pent-up demand from COVID-19 lockdowns and last-minute back-to-school/college shopping should give the space a boost. Plus, the sector performs well in a rising rate environment. The fund solid exposure to online ETF Amazon.com Inc. – a COVID-19 winner. Tesla has the second weight of 13.9%. This is a promising bet for the thriving electric vehicle space.
Investors can also take a look at a few semiconductor ETFs like XSD. Within the broader tech space, semiconductor, the value-centric traditional tech area, is in a sweet spot now. Higher demand from emerging technology applications like tablets and smartphones despite still-subdued PC shipments are tailwinds to the space.
Extremely low levels of Treasury yields may drive corporate bond demand. Investors should also note that U.S. corporates are sitting on healthy cash balance. U.S. corporate profits jumped to a fresh record high in the second quarter, boosted by robust demand and higher prices. This shows that slowdown is showing an ebbing trend. However, it is wiser to bet on investment-grade products like LQD as the performance of the junk-bond segment is closely tied to the seesawing performance of oil prices. LQD yields about 2.38% annually.
Dividend aristocrats are blue-chip dividend-paying companies with a long history of increasing dividend payments year over year. As a result, these products offer cushion against any kind of turbulence in the market.
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Fearing a September Slump? Buy These 5 ETFs
September is historically the worst month of the year for stocks. According to moneychimp.com, a consensus carried out from 1950 to 2020 has revealed that September ended up offering positive returns in 32 years and negative returns in 39 years, with an average return of negative 0.62%, which is worse than any other month.
Terrifying financial events like the start of the Great Depression in 1929 or the fall of Lehman Brothers in 2008 all crept up in the month of September. This September is no different with taper tensions rising in the United States.
China’s regulatory crackdown on the all-important tech sector and last but not the least the fear about the rising Delta variant of COVID-19 have weighed on the market momentum. All these make it more important to pin point ETFs that have the power to navigate such threats.
ETFs in Focus
S&P 500 Real Estate Sector SPDR (XLRE - Free Report)
The real estate corner of the broad market has been an area to watch lately. Low rates caused by the dovish Fed and fears for the delta variant of Covid-19 have been keeping the rates low and boosting the rate-sensitive sectors like real estate.
The rise in cost of shelter is also a plus for the real estate stocks and ETFs. Rising home prices have also boosted the demand for renting. The job market is still far from being steady. This means demand for real estates for rent purpose is likely to remain strong from middle-income or low-income consumers.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
A lot of factors are favoring this sector. Decent consumer confidence level, pent-up demand from COVID-19 lockdowns and last-minute back-to-school/college shopping should give the space a boost. Plus, the sector performs well in a rising rate environment. The fund solid exposure to online ETF Amazon.com Inc. – a COVID-19 winner. Tesla has the second weight of 13.9%. This is a promising bet for the thriving electric vehicle space.
SPDR S&P Semiconductor ETF (XSD - Free Report)
Investors can also take a look at a few semiconductor ETFs like XSD. Within the broader tech space, semiconductor, the value-centric traditional tech area, is in a sweet spot now. Higher demand from emerging technology applications like tablets and smartphones despite still-subdued PC shipments are tailwinds to the space.
iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD - Free Report)
Extremely low levels of Treasury yields may drive corporate bond demand. Investors should also note that U.S. corporates are sitting on healthy cash balance. U.S. corporate profits jumped to a fresh record high in the second quarter, boosted by robust demand and higher prices. This shows that slowdown is showing an ebbing trend. However, it is wiser to bet on investment-grade products like LQD as the performance of the junk-bond segment is closely tied to the seesawing performance of oil prices. LQD yields about 2.38% annually.
SPDR S&P Dividend ETF (SDY - Free Report)
Dividend aristocrats are blue-chip dividend-paying companies with a long history of increasing dividend payments year over year. As a result, these products offer cushion against any kind of turbulence in the market.