The S&P 500 entered into a bear market on Jun 13. The S&P 500 Index closed more than 21% below its all-time record close reached last January, S&P Global Dow Jones Indices’ senior index analyst Howard Silverblatt wrote, as quoted on CNBC. Although stocks had entered into a bear market territory many times for the past several weeks on an intraday basis, it never closed at that level.
Since late 1920s, the average bear market of the S&P 500 has resulted in a 38% price decline lasting an average of almost 19 months,
per the CNBC article. The longest bear market persisted for 62 months, between 1937 and 1946, while the worst decline came amid the Great Depression when stocks plunged 86%.
The bets of a 75-bp Fed rate hike this week amid sky-high inflation, ECB’s looming hawkish stance, the Russia-Ukraine war, soaring energy prices and a renewed surge in COVID cases in countries like United Kingdom and China have sent stocks in the bear market this time around.
However, many market masters have been seeing it as a great opportunity to buy the dip. Dan Ives, managing director at Wedbush Securities, said that the market is offering a ‘generational’ buying opportunity,
quoted on CNBC. Rob Sechan, NewEdge Wealth managing partner and co-founder believes it is a time to buy stocks, as quoted on CNBC.
Against this backdrop, below we highlight a few ETFs that have a Zacks Rank #3 (Hold) or 2 (Buy) or 1 (Strong Buy). The ETFs have lost lesser than the S&P 500 (down 4%) past month and have a P/E less than #23X as well as a Beta less than one (as of Jun 13, 2022).
Health Care Select Sector SPDR ETF ( XLV Quick Quote XLV - Free Report) – Zacks Rank #1
The sector’s demand is indispensable, irrespective of the economic condition. Even if the United States sees a recession, healthcare stocks would be in fine fettle (read:
1970s-Style Stagflation in the Cards? ETF Strategies to Win). Beta: 0.77X Performance One-Month: Down 1.09% P/E (36 Months): 15.99X Vanguard Dividend Appreciation ETF ( VIG Quick Quote VIG - Free Report) – Zacks Rank #1
Dividend aristocrats are blue-chip dividend-paying companies with a long track record of increasing dividend payments year over year. As a result, these stocks offer a safer exposure (read:
Tap Dividend Aristocrat ETFs Amid Current Market Upheavals). Beta: 0.86X Performance One-Month: Down 2.47% P/E (36 Months): 20.80X SPDR Dow Jones Industrial Average ETF ( DIA Quick Quote DIA - Free Report) – Zacks Rank #1
The Dow Jones was badly hurt during the peak of the pandemic and underperformed its peers the S&P 500 and the Nasdaq Composite. But tables are turning for the Dow Jones. It has lost the least this year amongst three key U.S. equity gauges.
The Dow Jones is likely to be more immune to inflationary threats. The index has a better value quotient (0.14) than the S&P 500 (0.03), per etf.com. Plus, the Dow Jones has some materials companies in its kitty. Since material prices are the beneficiaries of inflation (read:
Best Index ETFs to Play the Surge in Inflation). Beta: 0.94X Performance One-Month: Down 2.09% P/E (36 Months): 16.44X Vanguard Mega Cap Value ETF ( MGV Quick Quote MGV - Free Report) – Zacks Rank #1
As rates are rising value stocks and funds are likely to underperform. Value stocks have strong fundamentals — earnings, dividends, book value and cash flow —and trade below their intrinsic value. Value stocks are less susceptible to trending markets and their dividend payouts offer safety in times of market turbulence (read:
5 Value ETFs to Buy Now for Outperformance). Beta: 0.89X Performance One-Month: Down 1.34% P/E (36 Months): 15.60X