The market is maintaining a strong foothold as optimism surrounding the U.S. economic recovery and solid fundamentals. The broad market indices began this week in green as the Dow Jones Industrial Average rose 0.3% on Mar 28. TheS&P 500 and the Nasdaq composite were also up 0.7% and 1.3%, respectively, on the same day. The strength of tech-heavy players largely drove the market rally. Tesla (
TSLA Quick Quote TSLA - Free Report) surged 8% on an update that it will request shareholders to split its shares for paying them dividends.
Market participants also got relief as the CBOE Volatility Index, popularly called Wall Street's "fear index,” slipped below 20 for the first time since mid-January (per a CNBC article). Going on, peace talks between Russia and Ukraine are also adding to the optimistic sentiments amid the war-led uncertain times.
It is important to note that markets have been majorly gaining since the benchmark interest rate hikes. The Federal Reserve approved a 0.25 percentage point rate hike (the first increase since December 2018) on Mar 16. The central bank also announced plans to increase interest rates six times this year, aiming to touch a consensus funds rate of 1.9% by 2022-end (per a CNBC article). This aggressive stance has been going down well with the market participants for some time as they believe it will assist in controlling the hot inflation levels over the longer term. Investors also believe that the strong U.S. economic fundamentals might have supported Fed’s decision.
The report on last week’s jobless claims also turned out to be very encouraging. According to the Labor Department report released on Mar 24, initial jobless claims of the previous week had hit the lowest level since 1969 and totaled 187,000. The figures reinforced the market participants’ confidence in the economic recovery from the pandemic-led slowdown.
Moreover, the labor market continues to improve. According to the Bureau of Labor Statistics, the U.S. economy added 678,000 jobs in February, beating economists’ expectations of 440,000 (per Dow Jones). The unemployment rate also dropped to 3.8%.
The latest release on U.S. industrial output data also looks good amid an improving labor market and easing pandemic conditions. Per Fed’s recently-issued data, total industrial production inched up 0.5% in February. A 1.2% rise in the manufacturing output compared favorably with the index, remaining almost flat in the last two months.
ETFs to Ride the Tide
Investors who seek to capitalize on the strong trends should consider the following ETFs:
SPDR S&P 500 ETF Trust ( SPY Quick Quote 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 $412.41 billion.
iShares Core S&P 500 ETF ( IVV Quick Quote IVV - Free Report)
iShares Core S&P 500 ETF seeks to track the investment results of an index composed of large-capitalization U.S. equities.
iShares Core S&P 500 ETF has AUM of $333.32 billion and total expense ratio is 0.03%.
SPDR Dow Jones Industrial Average ETF Trust ( DIA Quick Quote DIA - Free Report)
SPDR Dow Jones Industrial Average ETF Trust seeks to provide investment results that before expenses generally correspond to the price and the yield performance of the Dow Jones Industrial Average.
SPDR Dow Jones Industrial Average ETF Trust charges an expense ratio of 0.16%, with AUM of $30.73 billion.
Invesco QQQ ( QQQ Quick Quote QQQ - Free Report)
Invesco QQQ provides exposure to the largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq-100 Index.
Invesco QQQ has AUM of $193.25 billion and charges investors 20 basis points in annual fees (read:
Filling ETFs in March Madness "Sweet 16" Brackets). Fidelity Nasdaq Composite Index ETF ( ONEQ Quick Quote ONEQ - Free Report)
Fidelity Nasdaq Composite Index ETF seeks to provide investment returns that closely correspond to the price and yield performance of the Nasdaq Composite Index.
Fidelity Nasdaq Composite Index ETF has AUM of $4.49 billion and the expense ratio comes in at 0.21% (read:
Guide to the Nasdaq ETF Investing).