Stocks have been on rough ride this month and even experienced the worst day since 2020 on Sep 13 as hot CPI data stoked rising rate worries and caused a crash in the market. The annual inflation rate in the United States came in at 8.3% in August 2022, the lowest in four months, down from 8.5% in July but above market forecasts of 8.1%.
Market participants are now split between a 75 bps and 100 bps Fed rate hike next week. No wonder stocks have been on a downhill ride. In any case, this year has been too tough for stocks. The S&P 500 is down 17.5%. So, no one needs to be vigilant before picking stocks and ETFs.
Against this backdrop, we have picked a few industries that have strong Zacks Rank. All these industries are ranked within the top 100, while the lowest Zacks Industry Rank has been 251 at the time of writing.
Semiconductor – VanEck Semiconductor ETF ( SMH Quick Quote SMH - Free Report) – Zacks Rank #1 (Strong Buy)
Wire and Cable Products, Semiconductors - Programmable Logic, Electronics - Measuring Instruments, Semiconductor – Communications are all industries with an upbeat Zacks Industry Ranks (read:
Semiconductor ETFs to Buy Now).
The rapid adoption of cutting-edge technology like cloud, Internet of Things, autonomous cars, gaming, wearables, VR headsets, drones, virtual reality devices, artificial intelligence, cryptocurrencies, 5G and other advanced information technologies should continue to fuel growth in the semiconductor space.
Retail – SPDR S&P Retail ETF ( XRT Quick Quote XRT - Free Report) – Zacks Rank #2 (Buy)
In this space, Retail - Convenience Stores, Retail - Mail Order, Automotive - Retail and Whole Sales, Retail – Jewelry, Retail - Regional Department Stores and Retail – Supermarkets have an Zacks Industry Rank within 100.
In any case, we are approaching the all-important holiday shopping season after the ongoing back-to-school season. The University of Michigan’s consumer sentiment for the United States was revised higher to 58.2 in August 2022 from a preliminary reading of 55.1. The gauge for expectations was upped to 58 from 47.3, and the current conditions subindex was upgraded to 58.6 from 58.1. Inflation expectations for 2023 eased to 4.8% from 5.2% in the previous month, its lowest in eight months, per tradingeconomics.
Oil Refiners – VanEck Oil Refiners ETF ( CRAK Quick Quote CRAK - Free Report)
Oil and Gas - Refining and Marketing has a Zacks Industry Rank of 10. Oil refiners gained momentum with the decline in oil prices in the past three-month period as the players in this industry use oil as an input for processing refined petroleum products. Hence, lower oil prices expand margins for refiners, leading to higher stock prices.
Transportation – SPDR S&P Transportation ETF ( XTN Quick Quote XTN - Free Report) – Zacks Rank #2
Transportation - Air Freight and Cargo, Transportation – Services, Transportation – Shipping, Transportation – Equipment, Leasing and Transportation – Rail and Transportation – Airline have an Industry Rank within 100 (read:
Looking for Earnings Beat? Play 6 Sector ETFs).
The industry produced a blended beat ratio of 66.7%. Of this, the earnings beat ratio is 73.7%, while the revenue beat ratio is 93.3%. As economic activities gained momentum, the sector fared better.
Internet - Software and Services – Technology Select Sector SPDR ETF ( XLK Quick Quote XLK - Free Report) – Zacks Rank #1
The space has a Zacks Industry Rank of 11.Although Internet stocks have been beaten down lately on rising rate concerns, software and services are the new normal.New trends like work-and-learn-from-home and online shopping, digital payments, and video streaming are sure to stay. The growing adoption of cloud computing, and the ongoing infusion of AI, machine learning and IoT are the other winning areas. XLK contains names like Apple, Microsoft, Nvidia, Visa, Mastercard, etc.