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5 Sector ETFs Soaring to New 52-Week High

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The Nasdaq Composite and the S&P 500 Index have soared to their highest levels of 2023, marking a significant milestone in the resurgence of Wall Street and reflecting an environment of considerable investor optimism. The tech-heavy Nasdaq hit a 14-month high, largely driven by massive gains from several of the tech index's largest companies. Meanwhile, the S&P 500 and the Dow Jones Industrial Average each achieved key milestones of their own.

Initially, the rally was concentrated in just a handful of mega-cap tech stocks but has now broadened, reaching various sectors. Easing inflation, stronger-than-expected corporate earnings and hopes that the Fed is nearing the end of its interest rate-hike cycle added to the strength (read: Nasdaq ETF's First Six-week Rally Since Jan 2020: Stock Winners).

As such, there are ETF winners from many corners of the investing world that are hitting a new 52-week high. We have highlighted five, each from different sectors. These include MicroSectors FANG+ ETN (FNGS - Free Report) , First Trust S-Network Future Vehicles & Technology ETF (CARZ - Free Report) , Communication Services Select Sector SPDR Fund (XLC - Free Report) , iShares U.S. Home Construction ETF (ITB - Free Report) and VanEck Vectors Video Gaming and eSports ETF (ESPO - Free Report) .

Inside The Rally

Mega-cap companies, notably those generating significant buzz in the AI sector, have been the key drivers of the Nasdaq recovery. Chipmakers Nvidia (NVDA) and American Micro Devices (AMD), as well as generative AI leaders Alphabet (GOOGL, GOOG) and Microsoft (MSFT), have each seen their stock prices surge more than 40% since the start of the year. This growth has been spurred, in part, by the release of Microsoft's ChatGPT AI chatbot and a subsequent spike in investments in generative AI developments and the hardware powering such technology.

Overall, the seven largest companies listed on the Nasdaq — Apple (AAPL), Microsoft, Alphabet, Amazon (AMZN), Nvidia, Tesla (TSLA), and Meta Platforms (META) — have collectively gained nearly $4 trillion in market cap in 2023. This remarkable growth is indicative of the broader strength of the tech sector and the investor confidence that has underpinned the Nasdaq's recovery. Meanwhile, the S&P 500 entered a new bull market, ending the longest bear streak since the 1940s (read: S&P 500 ETF Enters Bull Market: 5 Best Stocks YTD).

The U.S. economy, according to Oanda analyst Ed Moya, "is not showing strong signs" that a recession will occur this year. Moya cites steady output and consumer spending as "short-term good news for the stock market," offering a positive outlook for continued market stability and growth. Additionally, bouts of latest data shows that the economy is still resilient. The labor market is showing strength, while inflation has been moderating.

The economy added 339,000 jobs in May, up from April’s revised job gains number of 294,000, and hotter than the 190,000 jobs that economists were expecting. Meanwhile, inflation cooled down for the eleventh consecutive month in May. The Consumer Price Index revealed that headline inflation rose 0.1% over the last month and 4% year over year in May, representing a slowdown from April's 0.4% month-over-month increase and 4.9% annual gain. This marks the smallest yearly advance since March 2021.

This boosted bets that the Federal Reserve will not raise interest rates immediately. Traders have priced in a 93% chance that the U.S. central bank will hold interest rates at the 5-5.25% range, and 62% odds of a 25-basis-point hike in July. This anticipation of a stable interest rate policy has likely contributed to the bullish sentiment in the market.

MicroSectors FANG+ ETN (FNGS - Free Report) – 52-Week High: $117.89

MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket (read: 5 ETFs Leading the Tech Outperformance in May).

MicroSectors FANG+ ETN has accumulated $97 million in its asset base and charges 58 bps in annual fees. FNGS trades in an average daily volume of 86,000 shares and soared 70% this year. It has a Zacks ETF Rank #3 (Hold).

First Trust S-Network Future Vehicles & Technology ETF (CARZ - Free Report) – 52-Week High: $56.44

First Trust S-Network Future Vehicles & Technology ETF offers pure-play global exposure to 102 auto stocks by tracking the S-Network Electric & Future Vehicle Ecosystem Index. It has some concentration on the top two holdings — Nvidia and Tesla — with a combined 11.6% share, while the others hold no more than 5% share each.

First Trust S-Network Future Vehicles & Technology ETF has $43.2 million in AUM and trades in a small average daily trading volume of about 6,000 shares. The product charges 70 bps in fees per year and has gained 36.2% so far this year. It has a Zacks ETF Rank #3 with a High risk outlook.

Communication Services Select Sector SPDR Fund (XLC - Free Report) – 52-Week High: $64.72

Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services, and has accumulated $12.6 billion in its asset base. It follows the Communication Services Select Sector Index and holds 24 stocks in its basket, with a higher concentration on Meta and Alphabet, which accounts for half of the portfolio. About 52.4% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two (read: Why Communication Services ETFs Surged in 2023).

Communication Services Select Sector SPDR Fund charges 10 bps in annual fees and trades in an average daily volume of 6.4 million shares. It has risen 33.6% this year and has a Zacks ETF Rank #2 (Buy).

iShares U.S. Home Construction ETF (ITB - Free Report) – 52-Week High: $80.92

iShares U.S. Home Construction ETF provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index.

With an AUM of $2 billion, it holds a basket of 48 stocks, with a heavy concentration on the top two firms. iShares U.S. Home Construction ETF charges 39 bps in annual fees and trades in a heavy volume of around 2 million shares a day on average. iShares U.S. Home Construction ETF has gained 32.3% this year and has a Zacks ETF Rank #4 (Sell) with a High risk outlook.

VanEck Vectors Video Gaming and eSports ETF (ESPO - Free Report) – 52-Week High: $56.55
 
VanEck Video Gaming and eSports ETF offers exposure to global companies involved in video game development, e-sports and related hardware and software by tracking the MVIS Global Video Gaming and eSports Index. ESPO holds 31 stocks in its basket with a tilt toward NVDA and AMD, which collectively make up for 20.6% of assets.

VanEck Video Gaming and eSports ETF has gathered $295.6 million in its asset base while trading in an average daily volume of 38,000 shares. ESPO charges 56 bps in annual fees from investors and is up 31.7%.

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