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Why Reopening-Friendly ETFs Can be Bought on the Dip?

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Wall Street plunged last week on fear of the new Omicron variant of Covid-19 as the variant is highly transmissible and available vaccines may not suppress the strain. However, in a big relief to the world, the World Health Organization (WHO) has said lately that the world should not panic about the new Omicron variant of Covid-19 but it should prepare, per BBC.

We all know that most of 2021 has seen the surge in cases related to Delta variant. The director of the National Institute of Allergy and Infectious Diseases, Dr Anthony Fauci, recently said that Omicron may be less severe than Delta, per a Times Now article. Plus, the World Health Organization (WHO) said on Dec 3, 2021 that there were no reported deaths due to the Omicron variant so far.

If this was not enough, U.S. President said that Omicron lockdowns are not needed for now, per a BBC article. He touted the variant a "cause for concern, not a cause for panic." This indicates that Wall Street is highly likely to overcome the Omicron threat in the near term. Wall Street’s top stock market strategists have also come up with their views about Wall Street 2022, as quoted on a Yahoo Finance article, originally published on TKer.co.

Most bullish view is offered by the research house BMO, which offers the S&P 500 a target price of 5,300. Wells Fargo Investment Institute sees the key U.S. index in the range of 5,100-5,300. Morgan Stanley’s target price of 4,400 is the most pessimistic. Among 14 research houses, 9 houses’ target price crossed 5,000, marking a 10% rise from the current level.

Against this backdrop, below we highlight a few economic-reopening-friendly ETFs that can be bought on the dip.

iShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report)

The major bourses are likely to remain steady in 2022 after having tackled COVID-19 for about past two years. Solid corporate earnings and a large infrastructure bill should drive the market higher. After slowing in Q3, the U.S. GDP is likely to grow at the strongest clip this year in the ongoing October-December quarter, with some economists forecast GDP could jump to an 8% rate in the fourth quarter, per an article on usnews.com.

Vanguard S&P SmallCap 600 ETF (VIOO - Free Report)

As the U.S. economy is likely gain strength in the coming days, though at a modest pace due to Omicron fear, one may see gains in the small-cap stocks as pint-sized stocks are mainly domestically-focused (read: Are Small Caps the Best Bets for 2022? ETFs in Focus).

United States Oil Fund (USO - Free Report)

Rising global economic activities and demand for energy should boost oil prices. Oil rally has been a key feature in 2021. While the Omicron fear has quelled the rally a bit lately, milder infections may renew the rally once again (read: Top ETF Stories of November).

Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)

Bolstered by solid job growth, wage gains and record-high stock prices, consumer activity is likely to remain more-or-less robust in the coming days.

Industrial Select Sector SPDR ETF (XLI - Free Report)

The XLI ETF will likely gain ahead as the infrastructure bill will boost industrial activities in the country. The White House passed the $1.2 trillion bipartisan infrastructure bill in November. This is likely to boost Wall Street in 2022.

First Trust Financials AlphaDEX ETF (FXO - Free Report)

If the Omicron fear subsides and the Fed policy tightening comes in quicker than expected, investors may see a rising rate environment and a jump in financial stocks.

iShares TIPS Bond ETF (TIP - Free Report)

Global inflationary pressure is proving to be too heavy to handle. The annual inflation rate in the United States surged to 6.2% in October 2021, the highest since November 1990 and above forecasts of 5.8%. No wonder, investors will flock to TIPS ETFs. iShares TIPS Bond ETF hauled in about $1.67 billion in assets in November and is likely to be in sweet spot in the coming days as the Fed plans speeding up the QE tapering amid hot inflation (read: ETF Asset Report of November: S&P 500 Wins).