We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Despite concerns about narrow market, the S&P 500 logged an amazing 15.7% first-half rally. The rally was driven by cost-cutting measures initiated by big tech stocks, a less-hawkish Fed, slowly falling inflation, a resilient U.S. economy, and optimism surrounding generative artificial intelligence (gen AI).
But this also means that many investors missed out on the rally due to a narrow market. However, according to BofA Global Research, there is still an opportunity to capitalize on the stock market's strength in the second half of 2023, as quoted on Morningstar.
Inside Narrow Market Rally in 1H
BofA's equity and quant strategists, led by Savita Subramanian, noted that only 25% of stocks outperformed the S&P 500 during the first six months of 2023, as quoted on Morningstar, making it the narrowest first-half breadth ever recorded.
This means that the gains in a few mega-cap stocks, including Apple, Microsoft, Google parent Alphabet, Amazon, Nvidia, Tesla and Meta Platforms led to the S&P 500 rally. These seven stocks made up more than a quarter of the S&P 500's market capitalization.
Equal-Weighted Opportunity Lingering in 2H?
While the market was led by a handful of stocks, BofA expects the breadth to continue to broaden in the second half of the year. Investors have already shown interest in equal-weighted ETFs, with the Invesco S&P 500 Equal Weight ETF (RSP - Free Report) experiencing inflows of around $4.69 billion in June, per etf.com.
This mainly happened because RSP has managed to rise 5.9% this year and is undervalued (RSP has a P/E of 16.14X) than the S&P 500 SPDR ETF (SPY) (has a P/E of 17.86X). Moreover, many are of the view that mega-cap tech stocks and Tesla are moving toward ripe valuation.
ETFs in Focus
Against this backdrop, below, we highlight a few ETFs that have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and beat the S&P 500 in the past month (up 2.33%). These stocks have the potential to record a rally.
Image: Bigstock
Missing the Rally in 2023? Play these ETFs
Despite concerns about narrow market, the S&P 500 logged an amazing 15.7% first-half rally. The rally was driven by cost-cutting measures initiated by big tech stocks, a less-hawkish Fed, slowly falling inflation, a resilient U.S. economy, and optimism surrounding generative artificial intelligence (gen AI).
But this also means that many investors missed out on the rally due to a narrow market. However, according to BofA Global Research, there is still an opportunity to capitalize on the stock market's strength in the second half of 2023, as quoted on Morningstar.
Inside Narrow Market Rally in 1H
BofA's equity and quant strategists, led by Savita Subramanian, noted that only 25% of stocks outperformed the S&P 500 during the first six months of 2023, as quoted on Morningstar, making it the narrowest first-half breadth ever recorded.
This means that the gains in a few mega-cap stocks, including Apple, Microsoft, Google parent Alphabet, Amazon, Nvidia, Tesla and Meta Platforms led to the S&P 500 rally. These seven stocks made up more than a quarter of the S&P 500's market capitalization.
Equal-Weighted Opportunity Lingering in 2H?
While the market was led by a handful of stocks, BofA expects the breadth to continue to broaden in the second half of the year. Investors have already shown interest in equal-weighted ETFs, with the Invesco S&P 500 Equal Weight ETF (RSP - Free Report) experiencing inflows of around $4.69 billion in June, per etf.com.
This mainly happened because RSP has managed to rise 5.9% this year and is undervalued (RSP has a P/E of 16.14X) than the S&P 500 SPDR ETF (SPY) (has a P/E of 17.86X). Moreover, many are of the view that mega-cap tech stocks and Tesla are moving toward ripe valuation.
ETFs in Focus
Against this backdrop, below, we highlight a few ETFs that have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and beat the S&P 500 in the past month (up 2.33%). These stocks have the potential to record a rally.
First Trust NASDAQ Transportation ETF (FTXR - Free Report)
Zacks Rank: #2
Past Month Performance: Up 9.21%
Invesco Dynamic Building & Construction ETF (PKB - Free Report)
Zacks Rank: #2
Past Week Performance: Up 4.6%
SPDR S&P Retail ETF (XRT - Free Report)
Zacks Rank: #1
Past Month Performance: Up 4.10%
First Trust Industrials/Producer Durables AlphaDEX ETF (FXR - Free Report)
Zacks Rank: #2
Past Month Performance: Up 3.52%
Vanguard Mid-Cap Value ETF (VOE - Free Report)
Zacks Rank: #1
Past Month Performance: Up 3.18%