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Top-Ranked ETFs to Buy as Goldman Cuts U.S. Recession Forecast
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The recessionary fears are ebbing in the United States. Goldman Sachs expects a 20% chance of a U.S. recession in the next 12 months, per a Yahoo Finance article. The firm had initially predicted a 25% probability of a recession, which is significantly lower than the 54% chance indicated by the consensus estimates mentioned in the Wall Street Journal, as quoted on the Yahoo article.
With the U.S. economy witnessing upbeat economic datapoints and Q2 earnings season unfolding in a decent manner, Goldman Sachs lowered their recession forecast. The University of Michigan Consumer Sentiment Index for July jumped to its highest level since September 2021, indicating growing confidence in the U.S. economy.
This unexpected increase reflects positive factors such as the slowdown in inflation and stability in labor markets. The University of Michigan report highlights a 19% surge in long-term business conditions and a 16% increase in short-run business conditions.
The Consumer Price Index for June and the Producer Price Index both indicated slower-than-expected increases in prices. Additionally, weekly jobless claims were lower than anticipated, demonstrating the resilience of the labor market.
How Will Fed React?
A 25-bp rate hike is almost sanguine this month while chances of a 25-bp rate hike in September is meagre. Per CME FedWatch Tool, there is 86% chance of no further rate hike in September, after July rate hike. Chances of no further rate hike in November is 70.4%. Its means rates in the United States are about to peak in latter part of this year. This is going to spell good for the overall stock investing.
ETFs to Invest
Against this backdrop, below we highlight a few ETFs that could good bets currently.
Vanguard Consumer Discretionary Fund (VCR - Free Report)
The underlying MSCI US Investable Market Consumer Discretionary 25/50 Index is designed to transition in and out of securities affected by pending updates to the consumer discretionary sector. The fund, which charges 10 bps in fees, has a Zacks Rank #2.
The underlying Financial Select Sector Index seeks to provide an effective representation of the financial sector of the S&P 500 Index. The fund, which has a Zacks Rank #1, charges 10 bps in fees and yields 2.0% annually.
WisdomTree U.S. SmallCap Dividend ETF (DES - Free Report)
The underlying WisdomTree U.S. SmallCap Dividend Index is a fundamentally weighted index measuring the performance of the small-capitalization segment of the US dividend-paying market. The fund charges 38 bps in fees and yields 3.03% annually. The fund has a Zacks Rank #1.
The underlying MSCI US Investable Market Information Technology 25/50 Index is designed to transition in and out of securities affected by pending updates to the information technology sector. The Zacks Rank #1 fund charges 10 bps in fees and yields 0.69% annually.
The underlying S&P Semiconductor Select Industry Index represents the Semiconductor 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 Semiconductor Index is a modified equal weight index. The Zacks Rank #1 fund charges 35 bps in fees.
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Top-Ranked ETFs to Buy as Goldman Cuts U.S. Recession Forecast
The recessionary fears are ebbing in the United States. Goldman Sachs expects a 20% chance of a U.S. recession in the next 12 months, per a Yahoo Finance article. The firm had initially predicted a 25% probability of a recession, which is significantly lower than the 54% chance indicated by the consensus estimates mentioned in the Wall Street Journal, as quoted on the Yahoo article.
With the U.S. economy witnessing upbeat economic datapoints and Q2 earnings season unfolding in a decent manner, Goldman Sachs lowered their recession forecast. The University of Michigan Consumer Sentiment Index for July jumped to its highest level since September 2021, indicating growing confidence in the U.S. economy.
This unexpected increase reflects positive factors such as the slowdown in inflation and stability in labor markets. The University of Michigan report highlights a 19% surge in long-term business conditions and a 16% increase in short-run business conditions.
The Consumer Price Index for June and the Producer Price Index both indicated slower-than-expected increases in prices. Additionally, weekly jobless claims were lower than anticipated, demonstrating the resilience of the labor market.
How Will Fed React?
A 25-bp rate hike is almost sanguine this month while chances of a 25-bp rate hike in September is meagre. Per CME FedWatch Tool, there is 86% chance of no further rate hike in September, after July rate hike. Chances of no further rate hike in November is 70.4%. Its means rates in the United States are about to peak in latter part of this year. This is going to spell good for the overall stock investing.
ETFs to Invest
Against this backdrop, below we highlight a few ETFs that could good bets currently.
Vanguard Consumer Discretionary Fund (VCR - Free Report)
The underlying MSCI US Investable Market Consumer Discretionary 25/50 Index is designed to transition in and out of securities affected by pending updates to the consumer discretionary sector. The fund, which charges 10 bps in fees, has a Zacks Rank #2.
Financial Select Sector SPDR ETF (XLF - Free Report)
The underlying Financial Select Sector Index seeks to provide an effective representation of the financial sector of the S&P 500 Index. The fund, which has a Zacks Rank #1, charges 10 bps in fees and yields 2.0% annually.
WisdomTree U.S. SmallCap Dividend ETF (DES - Free Report)
The underlying WisdomTree U.S. SmallCap Dividend Index is a fundamentally weighted index measuring the performance of the small-capitalization segment of the US dividend-paying market. The fund charges 38 bps in fees and yields 3.03% annually. The fund has a Zacks Rank #1.
Vanguard Information Technology ETF (VGT - Free Report)
The underlying MSCI US Investable Market Information Technology 25/50 Index is designed to transition in and out of securities affected by pending updates to the information technology sector. The Zacks Rank #1 fund charges 10 bps in fees and yields 0.69% annually.
SPDR S&P Semiconductor ETF (XSD - Free Report)
The underlying S&P Semiconductor Select Industry Index represents the Semiconductor 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 Semiconductor Index is a modified equal weight index. The Zacks Rank #1 fund charges 35 bps in fees.