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The S&P 500 has been performing remarkably this year, gaining about 9%. Most of the rally was driven by soaring tech stocks, moderating inflation and upbeat corporate earnings. The recent bets that the Fed will end its tight monetary policy, given easing inflation and a still-resilient economy, has added to the strength in recent weeks though debt default fears continued to hamper investor sentiment.
The solid trend is likely to continue as Wall Street analysts become more bullish on the S&P 500. In order to tap this opportune moment, investors should bet on ETFs that track the S&P 500 Index. These include SPDR S&P 500 ETF Trust (SPY - Free Report) , iShares Core S&P 500 ETF (IVV - Free Report) , Vanguard S&P 500 ETF (VOO - Free Report) , SPDR Portfolio S&P 500 ETF (SPLG - Free Report) and Invesco S&P 500 Top 50 ETF (XLG - Free Report) .
Bullish View
Six tech stocks — Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Alphabet (GOOGL, GOOG), Amazon (AMZN) and Meta Platforms (META) — drove 100% of the rally in the S&P 500. AAPL, MSFT, NVDA, GOOGL and GOOG gained 22.3%, 22.1%, 19.4%, 14.2%, 12.1% and 11.4%, respectively. Bank of America strategist Michael Hartnett calls these stocks, including Tesla (TSLA), the “Magnificent Seven.” These stocks have together added $3.35 trillion in market value this year (read: 5 ETFs Leading the Tech Outperformance in May).
Most Wall Street analysts raised their target price on S&P 500 for this year for the second time in many weeks. Early this week, the equity strategy team at RBC Capital Markets raised its year-end price target on the index to 4,250 from 4,100. Last week, Bank of America Global Research gave a call for the S&P 500 to hit 4300 by the end of the year.
Corporate America has shifted focus to structural benefits, and booming artificial intelligence (AI) will continue to drive the stock market higher. This, coupled with an improving earnings picture and the hopes of easing policy, are some of the factors that will drive the S&P 500 higher (read: Nvidia Hits Trillion-Dollar Market Cap: 5 ETFs to Track).
With 97% of the S&P 500 having reported first-quarter results, earnings for the index were down 2.1% from the same quarter last year, per data from FactSet. The 2.1% drop marks a massive improvement from a 6.8% earnings decline projected at the start of the first-quarter earnings season.
Per the Earnings Trends, the picture that emerged from the Q1 earnings season was one of continued resilience and stability, with companies not only beating estimates but also providing a good-enough outlook in an uncertain macro environment. Total earnings for 97.2% of the index’s total membership are down 3.7% from the same period last year on 4.5% higher revenues, with 78.2% beating EPS estimates and 75.1% beating revenue estimates.
SPDR S&P 500 ETF Trust tracks the S&P 500 Index and holds 504 stocks in its basket, with each accounting for no more than 7.6% of assets. SPDR S&P 500 ETF Trust is heavy on the information technology sector while healthcare, financials and consumer discretionary round off the next three spots with a double-digit allocation each.
SPDR S&P 500 ETF Trust charges investors 9 bps in annual fees and trades in an average daily volume of 68 million shares. It has AUM of $390.7 billion and a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
With AUM of $312 million, iShares Core S&P 500 ETF is a lot smaller than SPY and less liquid, trading in an average daily volume of 3 million. It charges just 3 bps in annual fees, 6 bps less than the State Street product. iShares Core S&P 500 ETF has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Vanguard S&P 500 ETF also directly tracks the S&P 500 Index and holds 505 stocks in its basket. It has amassed $296.5 billion in its asset base and charges investors 3 bps in annual fees. Vanguard S&P 500 ETF trades in an average daily volume of 3 million shares and has a Zacks ETF Rank #2 with a Medium risk outlook.
SPDR Portfolio S&P 500 ETF also follows the S&P 500 Index and holds 505 stocks in its basket with 0.03% in expense ratio. It has amassed $17.2 billion in its asset base and trades in a solid volume of 3 million shares a day, on average. SPDR Portfolio S&P 500 ETF has a Zacks ETF Rank #3 (read: 5 Broad International ETFs Beating S&P 500 This Year).
Invesco S&P 500 Top 50 ETF follows the S&P 500 Top 50 ETF Index, which measures the cap-weighted performance of 50 of the largest companies on the S&P 500 Index, reflecting the performance of the U.S. mega-cap stocks. Invesco S&P 500 Top 50 ETF has been able to manage assets worth $2.3 billion but trades in a moderate volume of about 40,000 shares a day on average. XLG charges 20 bps in annual fees and has a Zacks ETF Rank #3.
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Analysts Raise S&P 500 Target Price: ETFs to Buy
The S&P 500 has been performing remarkably this year, gaining about 9%. Most of the rally was driven by soaring tech stocks, moderating inflation and upbeat corporate earnings. The recent bets that the Fed will end its tight monetary policy, given easing inflation and a still-resilient economy, has added to the strength in recent weeks though debt default fears continued to hamper investor sentiment.
The solid trend is likely to continue as Wall Street analysts become more bullish on the S&P 500. In order to tap this opportune moment, investors should bet on ETFs that track the S&P 500 Index. These include SPDR S&P 500 ETF Trust (SPY - Free Report) , iShares Core S&P 500 ETF (IVV - Free Report) , Vanguard S&P 500 ETF (VOO - Free Report) , SPDR Portfolio S&P 500 ETF (SPLG - Free Report) and Invesco S&P 500 Top 50 ETF (XLG - Free Report) .
Bullish View
Six tech stocks — Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Alphabet (GOOGL, GOOG), Amazon (AMZN) and Meta Platforms (META) — drove 100% of the rally in the S&P 500. AAPL, MSFT, NVDA, GOOGL and GOOG gained 22.3%, 22.1%, 19.4%, 14.2%, 12.1% and 11.4%, respectively. Bank of America strategist Michael Hartnett calls these stocks, including Tesla (TSLA), the “Magnificent Seven.” These stocks have together added $3.35 trillion in market value this year (read: 5 ETFs Leading the Tech Outperformance in May).
Most Wall Street analysts raised their target price on S&P 500 for this year for the second time in many weeks. Early this week, the equity strategy team at RBC Capital Markets raised its year-end price target on the index to 4,250 from 4,100. Last week, Bank of America Global Research gave a call for the S&P 500 to hit 4300 by the end of the year.
Corporate America has shifted focus to structural benefits, and booming artificial intelligence (AI) will continue to drive the stock market higher. This, coupled with an improving earnings picture and the hopes of easing policy, are some of the factors that will drive the S&P 500 higher (read: Nvidia Hits Trillion-Dollar Market Cap: 5 ETFs to Track).
With 97% of the S&P 500 having reported first-quarter results, earnings for the index were down 2.1% from the same quarter last year, per data from FactSet. The 2.1% drop marks a massive improvement from a 6.8% earnings decline projected at the start of the first-quarter earnings season.
Per the Earnings Trends, the picture that emerged from the Q1 earnings season was one of continued resilience and stability, with companies not only beating estimates but also providing a good-enough outlook in an uncertain macro environment. Total earnings for 97.2% of the index’s total membership are down 3.7% from the same period last year on 4.5% higher revenues, with 78.2% beating EPS estimates and 75.1% beating revenue estimates.
SPDR S&P 500 ETF Trust (SPY - Free Report)
SPDR S&P 500 ETF Trust tracks the S&P 500 Index and holds 504 stocks in its basket, with each accounting for no more than 7.6% of assets. SPDR S&P 500 ETF Trust is heavy on the information technology sector while healthcare, financials and consumer discretionary round off the next three spots with a double-digit allocation each.
SPDR S&P 500 ETF Trust charges investors 9 bps in annual fees and trades in an average daily volume of 68 million shares. It has AUM of $390.7 billion and a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
iShares Core S&P 500 ETF (IVV - Free Report)
With AUM of $312 million, iShares Core S&P 500 ETF is a lot smaller than SPY and less liquid, trading in an average daily volume of 3 million. It charges just 3 bps in annual fees, 6 bps less than the State Street product. iShares Core S&P 500 ETF has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Vanguard S&P 500 ETF (VOO - Free Report)
Vanguard S&P 500 ETF also directly tracks the S&P 500 Index and holds 505 stocks in its basket. It has amassed $296.5 billion in its asset base and charges investors 3 bps in annual fees. Vanguard S&P 500 ETF trades in an average daily volume of 3 million shares and has a Zacks ETF Rank #2 with a Medium risk outlook.
SPDR Portfolio S&P 500 ETF (SPLG - Free Report)
SPDR Portfolio S&P 500 ETF also follows the S&P 500 Index and holds 505 stocks in its basket with 0.03% in expense ratio. It has amassed $17.2 billion in its asset base and trades in a solid volume of 3 million shares a day, on average. SPDR Portfolio S&P 500 ETF has a Zacks ETF Rank #3 (read: 5 Broad International ETFs Beating S&P 500 This Year).
Invesco S&P 500 Top 50 ETF (XLG - Free Report)
Invesco S&P 500 Top 50 ETF follows the S&P 500 Top 50 ETF Index, which measures the cap-weighted performance of 50 of the largest companies on the S&P 500 Index, reflecting the performance of the U.S. mega-cap stocks. Invesco S&P 500 Top 50 ETF has been able to manage assets worth $2.3 billion but trades in a moderate volume of about 40,000 shares a day on average. XLG charges 20 bps in annual fees and has a Zacks ETF Rank #3.