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Should You Buy the Dip in U.S. Stocks? Top ETFs in Focus
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August was a downbeat month for Wall Street mainly due to rising rate worries. The major stock market indices experienced a decline in their monthly performance. Specifically, the S&P 500 logged its poorest monthly performance since February, and the Dow Jones Industrial Average recorded its weakest performance since May.
The Nasdaq Composite also faced a significant downturn, marking its most unfavorable performance since November of the previous year, as quoted on Yahoo. With a downbeat August, both the S&P and the Nasdaq snapped a five-month win streak.
Should You Buy the Dip in U.S. Stocks?
Several analysts like HSBC and Morgan Stanley indicated that U.S. stocks may stage a rebound. HSBC analysts believe that short-term sentiment and positioning are now neutral. “We think this presents a pretty good tactical entry point into risk assets, above all into US equities,” HSBC wrote in a client note, as quoted on investing.com. Though the Q2 GDP growth numbers for the U.S. have been revised down, the economic picture is not that sour yet.
Meanwhile, Morgan Stanley analyst Andrew Slimmon believes there's more growth to be had in the S&P 500, boosted largely by 'Magnificent Seven' stocks which include Apple, Microsoft, Google owner Alphabet, Amazon, Nvidia, Tesla and Meta, per a Yahoo article. The S&P 500 could jump another 11% this year, per Morgan Stanley.
Slimmon predicts the S&P 500 to reach a benchmark "closer" to 5,000 by the end of the year. At the time of writing the S&P 500 sits at approximately 4,514—with a jump to the 5,000-mark representing a near 11% increase. Per Earnings Trends issued on Aug 30, 2023, year-over-year quarterly earnings will likely turn from negative to positive after Q3.
The S&P 500 is likely to record 5.2% growth in earnings over 3.2% uptick in revenues. Historically, such a positive transition is “greeted positively by equities”, per Slimmon of Morgan Stanley. In early Aug, according to Reuters, JP Morgan said that they are no longer expecting the U.S. economy to enter into a recession in 2023. Bank of America also followed the suit.
Against this backdrop, below we highlight a few top-ranked ETFs that could be tapped for gains ahead.
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 Zacks Rank #1 (Strong Buy) fund charges 10 bps in fees.
The underlying Indxx Global Cloud Computing Index provides exposure to exchange-listed companies in developed and emerging markets that are positioned to benefit from the increased adoption of cloud computing technology. The Zacks Rank #1 fund charges 68 bps in fees.
The underlying S&P MidCap 400 Growth Index measures the performance of growth stocks of medium-size U.S. companies. The Zacks Rank #2 (Buy) fund charges 15 bps in fees.
The underlying Nasdaq CTA Internet Index is a modified market-capitalization weighted index designed to track the performance of the largest & most liquid U.S.-listed companies engaged in internet-related businesses & that are listed on one of the three major U.S. stock exchanges. The Zacks Rank #2 fund charges 60 bps in fees.
The underlying Vident U.S. Quality Index is a rules-based, systematic strategy index comprised of equity securities principally traded in the U.S. market of issuers domiciled in the United States. The Zacks Rank #2 fund charges 50 bps in fees.
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Should You Buy the Dip in U.S. Stocks? Top ETFs in Focus
August was a downbeat month for Wall Street mainly due to rising rate worries. The major stock market indices experienced a decline in their monthly performance. Specifically, the S&P 500 logged its poorest monthly performance since February, and the Dow Jones Industrial Average recorded its weakest performance since May.
The Nasdaq Composite also faced a significant downturn, marking its most unfavorable performance since November of the previous year, as quoted on Yahoo. With a downbeat August, both the S&P and the Nasdaq snapped a five-month win streak.
Should You Buy the Dip in U.S. Stocks?
Several analysts like HSBC and Morgan Stanley indicated that U.S. stocks may stage a rebound. HSBC analysts believe that short-term sentiment and positioning are now neutral. “We think this presents a pretty good tactical entry point into risk assets, above all into US equities,” HSBC wrote in a client note, as quoted on investing.com. Though the Q2 GDP growth numbers for the U.S. have been revised down, the economic picture is not that sour yet.
Meanwhile, Morgan Stanley analyst Andrew Slimmon believes there's more growth to be had in the S&P 500, boosted largely by 'Magnificent Seven' stocks which include Apple, Microsoft, Google owner Alphabet, Amazon, Nvidia, Tesla and Meta, per a Yahoo article. The S&P 500 could jump another 11% this year, per Morgan Stanley.
Slimmon predicts the S&P 500 to reach a benchmark "closer" to 5,000 by the end of the year. At the time of writing the S&P 500 sits at approximately 4,514—with a jump to the 5,000-mark representing a near 11% increase. Per Earnings Trends issued on Aug 30, 2023, year-over-year quarterly earnings will likely turn from negative to positive after Q3.
The S&P 500 is likely to record 5.2% growth in earnings over 3.2% uptick in revenues. Historically, such a positive transition is “greeted positively by equities”, per Slimmon of Morgan Stanley. In early Aug, according to Reuters, JP Morgan said that they are no longer expecting the U.S. economy to enter into a recession in 2023. Bank of America also followed the suit.
Against this backdrop, below we highlight a few top-ranked ETFs that could be tapped for gains ahead.
ETFs in Focus
Vanguard Consumer Discretionary ETF (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 Zacks Rank #1 (Strong Buy) fund charges 10 bps in fees.
Global X Cloud Computing ETF (CLOU - Free Report)
The underlying Indxx Global Cloud Computing Index provides exposure to exchange-listed companies in developed and emerging markets that are positioned to benefit from the increased adoption of cloud computing technology. The Zacks Rank #1 fund charges 68 bps in fees.
Vanguard S&P Mid-Cap 400 Growth ETF (IVOG - Free Report)
The underlying S&P MidCap 400 Growth Index measures the performance of growth stocks of medium-size U.S. companies. The Zacks Rank #2 (Buy) fund charges 15 bps in fees.
Invesco NASDAQ Internet ETF (PNQI - Free Report)
The underlying Nasdaq CTA Internet Index is a modified market-capitalization weighted index designed to track the performance of the largest & most liquid U.S.-listed companies engaged in internet-related businesses & that are listed on one of the three major U.S. stock exchanges. The Zacks Rank #2 fund charges 60 bps in fees.
Vident U.S. Equity Strategy ETF (VUSE - Free Report)
The underlying Vident U.S. Quality Index is a rules-based, systematic strategy index comprised of equity securities principally traded in the U.S. market of issuers domiciled in the United States. The Zacks Rank #2 fund charges 50 bps in fees.