Wall Street just made it through the worst month this year, with the broad market indices exiting September in the red. The Dow Jones Industrial Average was down 4.3%. Moreover, the S&P 500 index and the Nasdaq Composite declined 4.8% and 5.3%, respectively.
The weakness has been caused by a variety of factors like rising coronavirus cases due to the highly contagious Delta variant, surging inflation levels, uncertainty surrounding the Federal Reserve’s meeting and its decision on tapering the fiscal stimulus along with China’s property crisis. Notably, 10 out of 11 S&P sectors were in the negative territory while the energy sector was positive with more than a 9% rise in September.
In this regard, Chris Hussey, a managing director at Goldman Sachs, has also noted that “A combination of slowing growth, less accommodative monetary policy, China headwinds, fading fiscal stimulus, and nagging supply chain bottlenecks all conspired to weigh on investor sentiment as we head into fall and 4Q21,” as mentioned in a CNBC article.
Going on, market analysts are skeptical about the Wall Street performance in October. The S&P 500 index has been observed to lose 0.4% in October after losing more than 2% in September, according to a
Barron’s article. October has a tarnished image of witnessing some of the biggest stock market crashes like the 1929 Black Tuesday and Thursday, and the great crash of 1987, which occurred on Oct 19. On that particular day, the Dow had tanked more than 20% on a single trading session, making it debatably the worst single-day decline in history.
October is clouded by certain issues like inflationary pressures, supply chain challenges, probabilities of Fed tapering the fiscal stimulus, China’s Evergrande crisis along with concerns about a debt-ceiling breach. These factors can keep the stock market volatile.
Against this backdrop, let’s take a look at some top-ranked ETFs that investors can consider for raking in some good returns:
iShares Semiconductor ETF ( SOXX Quick Quote SOXX - Free Report)
The semiconductor industry has been increasingly gaining investors' attention backed by its bright prospects. The coronavirus-induced work-from-home and web-based learning trends have spurred demand for chips from PC manufacturers and data-center operators. The increasing importance of Hybrid cloud among enterprises is attracting investments from large public cloud providers, including Amazon Web Services, Microsoft Azure, Google Cloud, International Business Machines and Oracle. The data-center chip providers will likely gain from this trend.
This ETF follows the ICE Semiconductor Index. It charges 43 basis points (bps) in fees a year from investors. It flaunts a Zacks ETF Rank #1 (Strong Buy), with a High-risk outlook (read:
Here's Why Semiconductor ETFs Are Looking Attractive for Q4). The Industrial Select Sector SPDR Fund ( XLI Quick Quote XLI - Free Report)
The industrial sector has been attracting investor attention as the gradual reopening of U.S. and global economies highlights brighter prospects. The latest ISM Manufacturing Purchasing Managers' Index (PMI)data for the United States paints a rosy picture for the industrial sector. In another positive development, optimism surrounding the news highlighting positive updates on Merck (MRK) and Ridgeback Biotherapeutics’ investigational oral antiviral medicine, molnupiravir, can support the sector. The update supports the spaces expected to gain from the reopening of economies as molnupiravir will help fight against COVID-19, if approved by the FDA.
The fund seeks to provide investment results that, before expenses, match the performance of the Industrial Select Sector Index. Its expense ratio is 0.12%. It flaunts a Zacks ETF Rank #1, with a Medium-risk outlook (read:
Fed Plans QE Taper: Time for Cyclical Sector ETFs?). Vanguard Health Care ETF ( VHT Quick Quote VHT - Free Report)
The pandemic has triggered a race to introduce vaccines and treatment options, opening up investment opportunities in the healthcare sector. Moreover, the space has been gaining attention lately on a spike in COVID-19 infections due to the Delta variant. This has made investors jittery, compelling them to shift toward defensive investments.
The fund seeks to track the performance of the MSCI US Investable Market Health Care 25/50 Index. It charges investors 10 bps in annual fees as stated in the prospectus. It carries a Zacks ETF Rank #1 with a Medium-risk outlook.
Fidelity MSCI Consumer Discretionary Index ETF ( FDIS Quick Quote FDIS - Free Report)
U.S. consumer sentiment also improved marginally despite rising concerns about coronavirus cases and inflationary levels. The University of Michigan’s preliminary consumer sentiment inched up to 71 in September from 70.3 last month, per a BloombergQuint article. The strength in consumer sentiment can be the primary driving force behind the solid consumer discretionary space performance as consumers are expected to splurge this holiday season after being restricted for more than a year.
The fund intends to provide investment results that before expenses generally correspond with the price and yield performance of the MSCI USA IMI Consumer Discretionary Index. It charges investors 8 bps in annual fees as stated in the prospectus. It carries a Zacks ETF Rank #2, with a Medium-risk outlook (read:
Will ETFs Gain as US Consumer Sentiment Improves in September?). First Trust Cloud Computing ETF ( SKYY Quick Quote SKYY - Free Report)
Cloud computing and storage are expected to stay in vogue during 2021. The space received quite a push amid the coronavirus outbreak, with a vast population working from home across the globe. Considering the accelerated coronavirus vaccine rollout, demand for cloud computing is set to stay robust even after the pandemic dies down.
It is worth knowing here that cloud computing and storage found applications in social networking, messaging apps and on streaming services. It empowered video conferencing, gaming, e-commerce shopping, remote project collaboration, online classes, editing, etc. Cloud computing is also supporting organizations in remotely processing a lot of information plus developing and running key applications as well as services.
The fund seeks investment results that generally correspond to the price and yield, before fees and expenses, of the ISE CTA Cloud Computing Index. It tracks the performance of companies actively involved in the cloud computing industry. The fund has an expense ratio of 0.60%. It carries a Zacks ETF Rank #2, with a Medium-risk outlook (read:
Thematic Investing Ideas to Boost Your Portfolio Returns in Q4).