Wall Street saw a smooth ride last week with all the three major indices reaching a series of new record highs. The S&P 500 and the Dow Jones gained 2% and 1.4% while the Nasdaq Composite Index rallied 3.1%, marling its best weekly performance since early April.
The rally was driven by upbeat corporate earnings, a strong jobs report and Pfizer ( PFE Quick Quote PFE - Free Report) promising a COVID-19 treatment. Notably, Q3 earnings from 445 S&P 500 members that have reported so far are up 42.9% from the same period last year on 18.6% lower revenues, with 80.2% beating EPS estimates and 74.4% beating revenue estimates. Though the earnings and revenue growth has come down in the ongoing Q3 earnings season from the first-half’s breakneck speed, it is still very high. Aggregate Q3 earnings for the S&P 500 Index are on track to reach a new all-time quarterly record, surpassing the record set in the preceding quarter (read: ETFs to Ride on a Solid Start to Q3 Earnings). Meanwhile, hiring picked up in October following a slowdown in summer. The U.S. economy added just 531,000 jobs and unemployment dropped to 4.6%. Pfizer announced that its COVID-19 drug, used with an HIV drug, reduced the risk of hospitalization and deaths substantially by 89%. The dual news has bolstered optimism about economic recovery, leading to risk-on trade. The Fed’s tapering announcement added to the strength. The central bank will begin tapering bond purchases “later this month” and will reduce buying by $15 billion a month, putting it on track to end the quantitative easing by the middle of next year. The move indicates a solid recovery in the U.S. economy (read: Fed to Start QE Taper: Is It Time for Cyclical Sector ETFs?). Given this, ETFs overall gathered about $20 billion capital last week (ending Nov 5), bringing in inflows of more than $739 billion year to date. U.S. equity ETFs led the way higher last week with $15.1 billion inflows, closely followed by $2.9 billion in U.S. fixed-income ETFs and $2.2 billion in international equity ETFs, per etf.com. Given this, we have highlighted five funds that dominated the top U.S. equity creation list last week and can continue to be investors’ darlings: SPDR S&P 500 ETF Trust ( SPY Quick Quote SPY - Free Report) SPY topped asset flow creation last week, gathering $3.7 billion in capital. It tracks the S&P 500 Index and holds 506 stocks in its basket with information technology, consumer discretionary, healthcare, financials and communication services being the top five, with a double-digit allocation each. With AUM of $424.9 billion, the ETF charges investors 9 bps in annual fees and trades in an average daily volume of 67.1 million shares. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. iShares Core S&P 500 ETF ( IVV Quick Quote IVV - Free Report) IVV gathered $1.5 billion in capital last week. It tracks the S&P 500 Index and holds 505 stocks in its basket with information technology, consumer discretionary, healthcare, financials and communications sectors being the top five with a double-digit allocation each. The ETF charges investors 3 bps in annual fees and trades in an average daily volume of 3.8 million shares. It has AUM of $321.3 billion and has a Zacks ETF Rank #2 with a Medium risk outlook. Vanguard Total Stock Market ETF ( VTI Quick Quote VTI - Free Report) This fund has accumulated $1.2 billion in capital, taking its total AUM to $288.5 billion. It provides exposure to the broader stock market by tracking the CRSP US Total Market Index. The ETF holds a large basket of well-diversified 4,025 stocks with key holdings in technology, consumer discretionary, industrials, healthcare and financials. It charges 3 bps in fees per year from investors and trades in an average daily volume 3.3 million shares. VTI has a Zacks ETF Rank #2 with a Medium risk outlook (read: 5 Winning ETF Ideas for the Fourth Quarter). Vanguard S&P 500 ETF ( VOO Quick Quote VOO - Free Report) VOO has accumulated $1.2 billion, taking its total AUM to $272.3 billion. It also tracks the S&P 500 Index and holds 510 stocks in its basket with information technology, healthcare, consumer discretionary, financials and communication services being the top five, with a double-digit allocation each. The ETF charges investors 3 bps in annual fees and trades in an average daily volume of 4.4 million shares. It has a Zacks ETF Rank #2 with a Medium risk outlook. Financial Select Sector SPDR Fund ( XLF Quick Quote XLF - Free Report) The ultra-popular financial ETF, XLF accumulated $998.3 million last week. It seeks to provide exposure to 65 companies in the diversified financial services, insurance, banks, capital markets, mortgage real estate investment trusts, consumer finance, and thrifts and mortgage finance industries. The product has AUM of $46.3 billion and charges 12 bps in annual fees. It trades in an average daily volume of 48 million shares and carries a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: 4 Sector ETFs & Stocks for Bountiful Returns in November).