Wall Street continues to see a disappointing week as the major indices are again in the red. The Dow Jones Industrial Average lost 0.9% in the last week seeing its fourth consecutive negative week (for the first time since September 2020). The S&P 500 index and the Nasdaq Composite indices also declined for a second straight week by losing about 1.2% and 0.9%, respectively.
The primary headwind behind the weakness is the rising omicron variant concern. The new strain has now been discovered in at least 15 U.S. states. In this regard, Centers for Disease Control and Prevention Director Dr. Rochelle Walensky has said that “We know we have several dozen cases and we’re following them closely. And we are every day hearing about more and more probable cases so that number is likely to rise,” as mentioned in a CNBC article. The new variant is feared to be carrying the combined features of the previous variants and can have high transmissibility and lower vaccine potency.
Investors seeking to capitalize on the strong fundamentals but worried about uncertainty should consider mid-cap ETFs like
Vanguard Mid-Cap ETF ( VO Quick Quote VO - Free Report) , SPDR S&P MIDCAP 400 ETF Trust ( MDY Quick Quote MDY - Free Report) , iShares Russell Mid-Cap Value ETF ( IWS Quick Quote IWS - Free Report) , Vanguard Mid-Cap Growth ETF ( VOT Quick Quote VOT - Free Report) and Schwab U.S. Mid-Cap ETF ( SCHM Quick Quote SCHM - Free Report) .
The release of certain disappointing economic data releases is also raising concerns. For starters, the November jobs reports reflected that the numbers could not maintain October’s momentum. Nonfarm payrolls increased by 210,000 in November, following a gain of 546,000 in the previous month. The metric lagged the expectations of 573,000 jobs, per a Dow Jones poll of economists (as mentioned in a CNBC article).
Going on, consumers continue to feel the rising heat of inflation levels. The latest data from the Conference Board highlights the depleting consumer confidence levels, as the metric just touched a nine-month-low level in November. The Conference Board's measure of consumer confidence index stands at 109.5 in November, down from October’s reading of 111.6. October’s reading was almost in line with the consensus estimate of the metric, coming in at 111, per a Reuters’ poll. The metric continues to be below the pre-pandemic level of 132.6 in February 2020.
However, there are still certain bright spots in the economy. According to the Institute for Supply Management (ISM) latest reading, its index of national factory activity increased to 61.1 last month from 60.8 in October. The data was just nominally ahead of economists’ estimate of 61.0 polled by Reuters. A reading above 50 indicates expansion in manufacturing, which makes up about 12% of the U.S. economy. Of the 18 manufacturing industries, 13 reported growth in November.
Also, market pundits are still recommending investors to buy the dip. In this regard, Emmanuel Cau of Barclays has mentioned that “We remain of the view that overall macro and liquidity conditions are supportive of equities, and advise to add on weakness, looking for the bull market to carry on.” This was mentioned in a CNBC article.
Mid-Cap ETFs to Consider
Considering the mixed sentiments, mid-cap funds are gaining attention as they provide both growth and stability compared to their small-cap and large-cap counterparts. As such, investors seeking to capitalize on the strong fundamentals but worried about uncertainty should consider mid-cap ETFs. Below, we have presented five popular mid-cap ETFs:
Vanguard Mid-Cap ETF
Vanguard Mid-Cap ETF seeks to track the performance of the CRSP US Mid Cap Index, which measures the investment return of mid-capitalization stocks. VO has AUM of $55.12 billion. Vanguard Mid-Cap ETF charges a fee of 4 basis points (bps).
SPDR S&P MIDCAP 400 ETF Trust
SPDR S&P MIDCAP 400 ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P MidCap 400 Index. MDY has AUM of $20.84 billion. SPDR S&P MIDCAP 400 ETF Trust charges a fee of 23 bps (see:
all the Mid Cap ETFs here). iShares Russell Mid-Cap Value ETF
iShares Russell Mid-Cap Value ETF provides exposure to mid-sized U.S. companies that are thought to be undervalued by the market relative to comparable companies and tracks the Russell MidCap Value Index. It has AUM of $14.50 billion. IWS charges a fee of 23 bps.
Vanguard Mid-Cap Growth ETF
Vanguard Mid-Cap Growth ETF seeks to track the performance of the CRSP US Mid Cap Growth Index, which measures the investment return of mid-capitalization growth stocks. VOT has AUM of $12.29 billion. Vanguard Mid-Cap Growth ETF charges a fee of 7 bps.
Schwab U.S. Mid-Cap ETF
Schwab U.S. Mid-Cap ETF’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Mid-Cap Total Stock Market Index. SCHM has AUM of $9.87 billion and charges a fee of 4 bps.