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5 ETF Bets for Those Undeterred by the Omicron Threat
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Wall Street has recouped some losses from the omicron threat-related weakness on the first trading day of the week. The Dow Jones Industrial Average was up 1.8% on Dec 6. The S&P 500 and the Nasdaq Composite were also up 1.1% and 0.9%, respectively, on the same trading day. Strength in reopening plays was observed with strong performances from sectors like energy, industrials and airlines.
The optimism in the market can be largely credited to comments from White House chief medical advisor Dr. Anthony Fauci on Dec 5. He addressed the initial data on the omicron variant to be “encouraging” (per a CNBC article). According to the same article, Fauci has also said that “Clearly, in South Africa, omicron has a transmission advantage. Although it’s too early to make any definitive statements about it, thus far it does not look like there’s a great degree of severity to it.”
Some market analysts are anticipating a market rally in December. According to Bank of America, the S&P 500 index has increased 2.3% on average since 1936 and remained positive 79% of the time in December, as stated in a CNBC article. 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.
Notably, 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.
Considering the current market situation, here we have highlighted some ETF options, including reopening plays that gain from the reopening and rebounding economy along with momentum bets that can rake in good returns amid market rallies:
Invesco S&P MidCap Momentum ETF follows the S&P Midcap 400 Momentum Index, designed to identify mid-cap firms with the highest momentum scores. XMMO has AUM of $994.5 million and an expense ratio of 0.33%. Invesco S&P MidCap Momentum ETF flaunts a Zacks ETF Rank #1 (Strong Buy) (read: High Momentum ETFs to Buy on Wall Street's Winning Streak).
The Industrial Select Sector SPDR Fund (XLI - Free Report)
The Industrial Select Sector SPDR Fund seeks to provide investment results that, before expenses, match the performance of the Industrial Select Sector Index. The fund seeks to provide precise exposure to companies in the following industries: aerospace and defense; industrial conglomerates; marine; transportation infrastructure; machinery; road and rail; air freight and logistics; commercial services and supplies; professional services; electrical equipment; construction and engineering; trading companies and distributors; airlines; and building products.
The Industrial Select Sector SPDR Fund has AUM of $16.91 billion and its expense ratio is 0.12%. The Industrial Select Sector SPDR Fund carries a Zacks ETF Rank #1, with a Medium-risk outlook (read: 5 Sector ETFs To Win Despite Weak November Jobs Data).
IVW provides exposure to large U.S. companies whose earnings are expected to grow at an above-average rate relative to the market and tracks the S&P 500 Growth Index. iShares S&P 500 Growth ETF has AUM of $38.66 billion and charges an expense ratio of 0.18%. IVW carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook (read: 5 Growth ETFs to Tap on an Incredible S&P 500 Rally).
SPDR S&P 500 ETF Trust seeks to provide investment results that before expenses generally correspond to the price and the yield performance of the S&P 500 Index. SPDR S&P 500 ETF Trust has a total expense ratio of 0.09% with AUM of $418.64 billion. SPY carries a Zacks ETF Rank #2, with a Medium-risk outlook.
Vanguard Energy ETF seeks to track the performance of the MSCI US Investable Market Energy 25/50 Index. With AUM of $5.81 billion, VDE charges 10 bps in fees and carries a Zacks ETF Rank #2, with a High-risk outlook.
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5 ETF Bets for Those Undeterred by the Omicron Threat
Wall Street has recouped some losses from the omicron threat-related weakness on the first trading day of the week. The Dow Jones Industrial Average was up 1.8% on Dec 6. The S&P 500 and the Nasdaq Composite were also up 1.1% and 0.9%, respectively, on the same trading day. Strength in reopening plays was observed with strong performances from sectors like energy, industrials and airlines.
The optimism in the market can be largely credited to comments from White House chief medical advisor Dr. Anthony Fauci on Dec 5. He addressed the initial data on the omicron variant to be “encouraging” (per a CNBC article). According to the same article, Fauci has also said that “Clearly, in South Africa, omicron has a transmission advantage. Although it’s too early to make any definitive statements about it, thus far it does not look like there’s a great degree of severity to it.”
Some market analysts are anticipating a market rally in December. According to Bank of America, the S&P 500 index has increased 2.3% on average since 1936 and remained positive 79% of the time in December, as stated in a CNBC article. 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.
Notably, 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.
Considering the current market situation, here we have highlighted some ETF options, including reopening plays that gain from the reopening and rebounding economy along with momentum bets that can rake in good returns amid market rallies:
Invesco S&P MidCap Momentum ETF (XMMO - Free Report)
Invesco S&P MidCap Momentum ETF follows the S&P Midcap 400 Momentum Index, designed to identify mid-cap firms with the highest momentum scores. XMMO has AUM of $994.5 million and an expense ratio of 0.33%. Invesco S&P MidCap Momentum ETF flaunts a Zacks ETF Rank #1 (Strong Buy) (read: High Momentum ETFs to Buy on Wall Street's Winning Streak).
The Industrial Select Sector SPDR Fund (XLI - Free Report)
The Industrial Select Sector SPDR Fund seeks to provide investment results that, before expenses, match the performance of the Industrial Select Sector Index. The fund seeks to provide precise exposure to companies in the following industries: aerospace and defense; industrial conglomerates; marine; transportation infrastructure; machinery; road and rail; air freight and logistics; commercial services and supplies; professional services; electrical equipment; construction and engineering; trading companies and distributors; airlines; and building products.
The Industrial Select Sector SPDR Fund has AUM of $16.91 billion and its expense ratio is 0.12%. The Industrial Select Sector SPDR Fund carries a Zacks ETF Rank #1, with a Medium-risk outlook (read: 5 Sector ETFs To Win Despite Weak November Jobs Data).
iShares S&P 500 Growth ETF (IVW - Free Report)
IVW provides exposure to large U.S. companies whose earnings are expected to grow at an above-average rate relative to the market and tracks the S&P 500 Growth Index. iShares S&P 500 Growth ETF has AUM of $38.66 billion and charges an expense ratio of 0.18%. IVW carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook (read: 5 Growth ETFs to Tap on an Incredible S&P 500 Rally).
SPDR S&P 500 ETF Trust (SPY - Free Report)
SPDR S&P 500 ETF Trust seeks to provide investment results that before expenses generally correspond to the price and the yield performance of the S&P 500 Index. SPDR S&P 500 ETF Trust has a total expense ratio of 0.09% with AUM of $418.64 billion. SPY carries a Zacks ETF Rank #2, with a Medium-risk outlook.
Vanguard Energy ETF (VDE - Free Report)
Vanguard Energy ETF seeks to track the performance of the MSCI US Investable Market Energy 25/50 Index. With AUM of $5.81 billion, VDE charges 10 bps in fees and carries a Zacks ETF Rank #2, with a High-risk outlook.