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After a downbeat September, October started on a volatile note. Soaring oil and gas prices, still-high coronavirus cases, and Fed’s taper talks along with the resultant rise in bond yields have kept the market volatile to start the month.
Historically, October has a moderate reputation in the stock market. According to moneychimp.com, a consensus carried out from 1950 to 2020 has revealed that October ended up offering positive returns in 43 years and negative returns in 87 years, with an average positive return of 0.62%.
This year is unlikely to be an exception. While jitters may emanate from the occasional rise in virus cases and rising rates, strength may be added by more vaccinations and the approval of an antiviral therapy of Merck (MRK), the economic reopening and the upcoming holiday season.
Against such a backdrop, let’s take a look at the ETFs that could be good picks in October.
With the fourth quarter being one of the upbeat times of Wall Street, one can bet on the total market stock. The ETF holds a large basket of well-diversified 3980 stocks with key holdings in technology, consumer discretionary, industrials, healthcare and financials. It charges as low as 3 bps in fees per year from investors (read: 5 ETFs Most Loved by Investors So Far in 2021).
Whatever the market movement, tech stocks are in great shape, showering gains irrespective of market conditions. Within the pack, Internet stocks deserve special mention. Unparalleled growth of high-speed mobile Internet traffic, still-untapped opportunities in emerging markets especially via the adoption of smartphones and tablets, 5G revolution and a sharp rise in online shopping should translate into the outperformance of Internet ETFs.
Consumers are expected to shell out a record $10.14 billion (up from $8.05 billion last year) on Halloween this year, according to the National Retail Federation. The average consumer is expected to spend $102.74 on costumes, candy, decorations and greeting cards, $10 more than last year, according to the NRF survey. About 65% Americans look to celebrate Halloween or participate in Halloween activities this year, up from 58% in 2020. So, chances are high that much of the shopping will be done at discount stores. No wonder, retail stocks should see a great journey ahead.
SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report)
Oil price has been on the rise in recent weeks with Brent oil hovering near its highest level since October 2018 and WTI crude near the highest since the start of August 2020. Tightening supply and improving demand fundamentals have been driving the prices higher. Oil analysts forecast a sustained rally in the liquid commodity as OPEC opposed calls to boost supply.
The underlying Utilities Select Sector Index seeks to provide an effective representation of the Utilities sector of the S&P 500 Index. Though rates are rising, it is still at pretty-lower levels. With winter approaching, electric utilities companies should see higher demand. Moreover, the Delta variant has still been acting as a headwind in the path of economic recovery. So, an occasional market slump is likely and the safe utilities sector could emerge a winner in those troubled times.
Invesco DB US Dollar Index Bullish ETF (UUP - Free Report)
The U.S. dollar strengthened lately versus a basket of major currencies as market watchers focused on Fed taper talks despite a surge in COVID-19 cases. Plus, the spread of the Delta variant of COVID-19 is another concern, which may slow down global growth further. It appears to be a win-win situation for the greenback as the global health crisis has not dissipated yet. This fact provides support to the safe-haven trades. Notably, the U.S. dollar is currently trading at a 14-month high against euro due to inflationary worries.
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6 ETFs to Likely to Bloom in October
After a downbeat September, October started on a volatile note. Soaring oil and gas prices, still-high coronavirus cases, and Fed’s taper talks along with the resultant rise in bond yields have kept the market volatile to start the month.
Historically, October has a moderate reputation in the stock market. According to moneychimp.com, a consensus carried out from 1950 to 2020 has revealed that October ended up offering positive returns in 43 years and negative returns in 87 years, with an average positive return of 0.62%.
This year is unlikely to be an exception. While jitters may emanate from the occasional rise in virus cases and rising rates, strength may be added by more vaccinations and the approval of an antiviral therapy of Merck (MRK), the economic reopening and the upcoming holiday season.
Against such a backdrop, let’s take a look at the ETFs that could be good picks in October.
Vanguard Total Stock Market ETF (VTI - Free Report)
With the fourth quarter being one of the upbeat times of Wall Street, one can bet on the total market stock. The ETF holds a large basket of well-diversified 3980 stocks with key holdings in technology, consumer discretionary, industrials, healthcare and financials. It charges as low as 3 bps in fees per year from investors (read: 5 ETFs Most Loved by Investors So Far in 2021).
Invesco NASDAQ Internet ETF (PNQI - Free Report)
Whatever the market movement, tech stocks are in great shape, showering gains irrespective of market conditions. Within the pack, Internet stocks deserve special mention. Unparalleled growth of high-speed mobile Internet traffic, still-untapped opportunities in emerging markets especially via the adoption of smartphones and tablets, 5G revolution and a sharp rise in online shopping should translate into the outperformance of Internet ETFs.
VanEck Vectors Retail ETF (RTH - Free Report)
Consumers are expected to shell out a record $10.14 billion (up from $8.05 billion last year) on Halloween this year, according to the National Retail Federation. The average consumer is expected to spend $102.74 on costumes, candy, decorations and greeting cards, $10 more than last year, according to the NRF survey. About 65% Americans look to celebrate Halloween or participate in Halloween activities this year, up from 58% in 2020. So, chances are high that much of the shopping will be done at discount stores. No wonder, retail stocks should see a great journey ahead.
SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report)
Oil price has been on the rise in recent weeks with Brent oil hovering near its highest level since October 2018 and WTI crude near the highest since the start of August 2020. Tightening supply and improving demand fundamentals have been driving the prices higher. Oil analysts forecast a sustained rally in the liquid commodity as OPEC opposed calls to boost supply.
Utilities Select Sector SPDR ETF (XLU - Free Report)
The underlying Utilities Select Sector Index seeks to provide an effective representation of the Utilities sector of the S&P 500 Index. Though rates are rising, it is still at pretty-lower levels. With winter approaching, electric utilities companies should see higher demand. Moreover, the Delta variant has still been acting as a headwind in the path of economic recovery. So, an occasional market slump is likely and the safe utilities sector could emerge a winner in those troubled times.
Invesco DB US Dollar Index Bullish ETF (UUP - Free Report)
The U.S. dollar strengthened lately versus a basket of major currencies as market watchers focused on Fed taper talks despite a surge in COVID-19 cases. Plus, the spread of the Delta variant of COVID-19 is another concern, which may slow down global growth further. It appears to be a win-win situation for the greenback as the global health crisis has not dissipated yet. This fact provides support to the safe-haven trades. Notably, the U.S. dollar is currently trading at a 14-month high against euro due to inflationary worries.