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Wall Street rallied yesterday on strong corporate earnings reports and a bet that markets have reached a bottom, as quoted on CNBC. All three major averages are above their 50-day moving averages for the first time since April. The broader market index has increased almost 7.4% off its June 16 closing low, the CNBC article noted (read: 4 Best-Performing ETF Themes of the Past Three Months).
The S&P 500, the Dow Jones and the Nasdaq are up 7.1%, 6.5% and 8.5% past month while the indexes are still down 17.4%, 14.5% and 27.4%, respectively. Investors are betting that stocks have reached a bottom after their steep declines this year.
The first half of 2022 could easily be attributed to the Russia-Ukraine war, red-hot inflation and rising-rate worries. The Fed enacted a steep interest rate hike worth 50 basis points in May and another one of 75 bps in June. No wonder, many analysts are forecasting a U.S. recession this year as the economy is still striving to recover from the pandemic.
Investors’ panic may have opened up an awesome buying opportunity, according to a Bank of America survey of professional investors on Tuesday, as quoted on CNBC. The Bank of America survey found that the allocation to stocks in portfolios is at its lowest since October 2008.
“Fundamentals poor but sentiment says stocks/credit rally in coming weeks,” wrote Bank of America’s chief investment strategist Michael Hartnett, as quoted on CNBC. Earnings potential is decent despite recession fears.
Per the Zacks Earnings Trends issued on Jul 6, 2022, the earnings of the index are projected to grow 1.8% in Q2, 7.2% in Q3 and 6.4% in Q4 of this year on revenue growth expectations of 9.7%, 8.9% and 6.7%, respectively. Bank earnings and earnings results from companies like Halliburton and Hasbro have come in upbeat so far.
Against this backdrop, below we highlight a few ETFs that are in high momentum currently.
ETFs in Focus
SPDR S&P Biotech ETF (XBI - Free Report) – Zacks Rank #2 (Buy); Up 17.9% Past Month
The underlying S&P Biotechnology Select Industry Index represents the biotechnology sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Biotech Index is a modified equal weight index. The fund charges 35 bps in fees.
iShares U.S. Home Construction ETF (ITB - Free Report) – Zacks Rank #3 (Hold); Up 16.1% Past Month
The underlying Dow Jones U.S. Select Home Builders Index is a subset of the Dow Jones U.S. Household Goods Index. It is a free-float adjusted market capitalization-weighted index. It measures the performance of the home construction sector of the U.S. equity market. The fund charges 41 bps in fees.
Fidelity MSCI Utilities Index ETF (FUTY - Free Report) – Zacks Rank #3; Up 7.4% Past Month
The underlying MSCI USA IMI Utilities Index represents the performance of the utilities sector in the U.S. equity market. The fund charges 8 bps in fees and yields 2.73% annually.
ProShares Big Data Refiners ETF (DAT - Free Report) – Zacks Rank #2; Up 7.3% Past Month
The underlying FactSet Big Data Refiners Index tracks the performance of companies that provide analytics, software, hardware and other computing infrastructure for managing and extracting information from large structured and unstructured datasets. The fund charges 58 bps in fees.
Invesco KBW High Dividend Yield Financial ETF (KBWD - Free Report) – Zacks Rank #3; Up 7.3% Past Month
The underlying KBW Nasdaq Financial Sector Dividend Yield Index is a dividend yield weighted index seeking to reflect the performance of approximately 24 to 40 publicly listed financial companies engaged in the business of providing financial services and products, including banking, insurance and diversified financial services, in the United States. The fund yields 10.6% annually.
VanEck Retail ETF (RTH - Free Report) – Zacks Rank #3; Up 7.0% Past Month
The underlying MVIS US Listed Retail 25 Index tracks the overall performance of companies involved in retail distribution, wholesalers, on-line, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. The fund charges 35 bps in fees.
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Has the Market Bottomed? 6 ETFs in High Momentum
Wall Street rallied yesterday on strong corporate earnings reports and a bet that markets have reached a bottom, as quoted on CNBC. All three major averages are above their 50-day moving averages for the first time since April. The broader market index has increased almost 7.4% off its June 16 closing low, the CNBC article noted (read: 4 Best-Performing ETF Themes of the Past Three Months).
The S&P 500, the Dow Jones and the Nasdaq are up 7.1%, 6.5% and 8.5% past month while the indexes are still down 17.4%, 14.5% and 27.4%, respectively. Investors are betting that stocks have reached a bottom after their steep declines this year.
The first half of 2022 could easily be attributed to the Russia-Ukraine war, red-hot inflation and rising-rate worries. The Fed enacted a steep interest rate hike worth 50 basis points in May and another one of 75 bps in June. No wonder, many analysts are forecasting a U.S. recession this year as the economy is still striving to recover from the pandemic.
Investors’ panic may have opened up an awesome buying opportunity, according to a Bank of America survey of professional investors on Tuesday, as quoted on CNBC. The Bank of America survey found that the allocation to stocks in portfolios is at its lowest since October 2008.
“Fundamentals poor but sentiment says stocks/credit rally in coming weeks,” wrote Bank of America’s chief investment strategist Michael Hartnett, as quoted on CNBC. Earnings potential is decent despite recession fears.
Per the Zacks Earnings Trends issued on Jul 6, 2022, the earnings of the index are projected to grow 1.8% in Q2, 7.2% in Q3 and 6.4% in Q4 of this year on revenue growth expectations of 9.7%, 8.9% and 6.7%, respectively. Bank earnings and earnings results from companies like Halliburton and Hasbro have come in upbeat so far.
Against this backdrop, below we highlight a few ETFs that are in high momentum currently.
ETFs in Focus
SPDR S&P Biotech ETF (XBI - Free Report) – Zacks Rank #2 (Buy); Up 17.9% Past Month
The underlying S&P Biotechnology Select Industry Index represents the biotechnology sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Biotech Index is a modified equal weight index. The fund charges 35 bps in fees.
iShares U.S. Home Construction ETF (ITB - Free Report) – Zacks Rank #3 (Hold); Up 16.1% Past Month
The underlying Dow Jones U.S. Select Home Builders Index is a subset of the Dow Jones U.S. Household Goods Index. It is a free-float adjusted market capitalization-weighted index. It measures the performance of the home construction sector of the U.S. equity market. The fund charges 41 bps in fees.
Fidelity MSCI Utilities Index ETF (FUTY - Free Report) – Zacks Rank #3; Up 7.4% Past Month
The underlying MSCI USA IMI Utilities Index represents the performance of the utilities sector in the U.S. equity market. The fund charges 8 bps in fees and yields 2.73% annually.
ProShares Big Data Refiners ETF (DAT - Free Report) – Zacks Rank #2; Up 7.3% Past Month
The underlying FactSet Big Data Refiners Index tracks the performance of companies that provide analytics, software, hardware and other computing infrastructure for managing and extracting information from large structured and unstructured datasets. The fund charges 58 bps in fees.
Invesco KBW High Dividend Yield Financial ETF (KBWD - Free Report) – Zacks Rank #3; Up 7.3% Past Month
The underlying KBW Nasdaq Financial Sector Dividend Yield Index is a dividend yield weighted index seeking to reflect the performance of approximately 24 to 40 publicly listed financial companies engaged in the business of providing financial services and products, including banking, insurance and diversified financial services, in the United States. The fund yields 10.6% annually.
VanEck Retail ETF (RTH - Free Report) – Zacks Rank #3; Up 7.0% Past Month
The underlying MVIS US Listed Retail 25 Index tracks the overall performance of companies involved in retail distribution, wholesalers, on-line, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. The fund charges 35 bps in fees.