Wall Street looks set to end the losing streak this week. The Dow Jones Industrial Average Index, which saw its first eight-week losing streak since 1923 in the week ending May 20, has been up 4.4% so far this week. The other two broad-market indices, the S&P 500 and the Nasdaq composite, which witnessed their seven-week lean patch last week, have also gained 4% and 3.4% each so far this week.
Part of this rally can be attributed to investors lobbying to witness a peak in the inflation levels. Moreover, the recently released Fed minutes from the May 3-4 meeting buoyed some optimism among the market participants as there was no element of surprise. The minutes highlighted that the central bank officials are ready to move ahead with several 50-basis point interest rate hikes to control the red-hot inflation readings.
Quincy Krosby, chief equity strategist for LPL Financial, believes that the U.S. consumer spending is relatively strong. In this regard, she mentioned that “To be sure, the data releases this week suggest the economy is slowing, and the Fed appears poised to raise rates at a 50 basic point clip over the next two months. But the notion that the consumer, 70 percent of the U.S. economy, is on a spending strike, is overblown as earnings reports coupled with positive guidance indicate otherwise”, as stated in a CNBC article.
Several retail earnings also rekindled bullishness among investors. Macy’s (
M Quick Quote M - Free Report) shares were up 19.3% on May 26 on the lifted guidance for 2022 profit levels. Dollar Tree ( DLTR Quick Quote DLTR - Free Report) also rose 21.9% on an earnings beat.
Adding to the upbeat scenario is the decline in the initial jobless claims for the week ended May 21. The same came in at 210,000, declining from the previous week’s reading of 218,000, per a CNBC article.
Also, certain U.S. economic data releases have been encouraging so far. The Department of Commerce reported that retail sales in April were up 0.9% month over month, below the consensus estimate of 1%. Year over year, retail sales grew 8.2% in April. The Federal Reserve reported that industrial production increased 1.1% last month, well above the consensus estimate of 0.5%.
ETFs to Ride the Tide
Investors seeking 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% and an AUM of $365.52 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 an AUM of $288.83 billion and a total expense ratio of 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 an AUM of $28.07 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 an AUM of $158.88 billion and charges investors 20 basis points as annual fees (read:
2 ETFs to Watch for Outsized Volume on Mid-Cap & Consumer). 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 the yield performance of the Nasdaq Composite Index.
Fidelity Nasdaq Composite Index ETF has an AUM of $3.71 billion and an expense ratio of 0.21% (read:
Guide to the Nasdaq ETF Investing).