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ETFs to Ride on S&P 500's Longest Winning Streak Since 2021
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After entering correction territory in the last week of October, the S&P 500 Index staged a solid comeback in the first week of November. Notably, the benchmark rallied for eight consecutive days, the longest winning streak since 2021. The rally came on the back of Federal Reserve Chairman Jerome Powell's "slightly dovish" stance on the direction of monetary policy, which allayed fears of interest rates staying higher for longer than expected (read: 5 Stocks That Powered S&P 500 ETF Last Week).
The solid trend is likely to continue, given a bullish signal. 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) and SPDR Portfolio S&P 500 ETF (SPLG - Free Report) .
The retreat in bond yields, which are inversely related to bond prices, has been a significant contributor to the rally. The Fed voted to hold interest rates at their highest range in 22 years at the conclusion of its latest policy meeting and investors bet that the central bank may be done hiking. This has specifically benefited technology stocks, with major companies like Salesforce, Apple and Microsoft seeing their shares rise.
Despite caution from hawkish Fed members, most traders are betting against a rate hike this year, with some expecting a rate cut by March. According to the CME FedWatch tool, 90% of traders are sticking with their bets that there won't be a hike this year, and 25% expect a rate cut in March.
Additionally, the fall in oil prices has lent support to the stock market upturn. Concerns about demand, especially from China and the United States, have led to a decrease in oil prices, which in turn could help to ease inflation worries and bolster investor confidence.
Further, better-than-expected earnings added to the strength. With more than 88% of the third-quarter results already out, earnings are poised to grow despite the significant energy sector drag, which follows three back-to-back quarters of declines (read: Q3 Earnings Midway: 5 Sector ETFs to Bet on Revenue Growth).
A rare bullish stock market indicator just flashed, signaling that the S&P 500's rally that started in October 2022 has room to go higher. The Zweig Breadth Thrust Indicator was triggered on Nov 3 after the S&P 500 rose 6% in its biggest weekly gain of the year. This is the 18th time the indicator has flashed since 1945, according to data from Carson Group's Ryan Detrick and Ned Davis Research.
This rare signal is simply stocks moving from very oversold to overbought in less than two weeks. When the indicator flashes, it "represents a sudden and swift improvement in breadth conditions after they have been beaten down."
SPDR S&P 500 ETF Trust tracks the S&P 500 Index and holds 503 stocks in its basket, with each accounting for no more than 7.3% of the 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 75 million shares. It has AUM of $408.5 billion and a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
With AUM of $356 million, iShares Core S&P 500 ETF is much smaller than SPY and less liquid, trading in an average daily volume of 4.2 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 $333.7 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 4.4 million shares and has a Zacks ETF Rank #2 with a Medium risk outlook (read: 5 Hottest ETFs of the Best Week of 2023).
SPDR Portfolio S&P 500 ETF also follows the S&P 500 Index and holds 505 stocks in its basket with 0.02% in expense ratio. It has amassed $21.2 billion in its asset base and trades in a solid volume of 4.3 million shares a day, on average. SPDR Portfolio S&P 500 ETF has a Zacks ETF Rank #2.
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ETFs to Ride on S&P 500's Longest Winning Streak Since 2021
After entering correction territory in the last week of October, the S&P 500 Index staged a solid comeback in the first week of November. Notably, the benchmark rallied for eight consecutive days, the longest winning streak since 2021. The rally came on the back of Federal Reserve Chairman Jerome Powell's "slightly dovish" stance on the direction of monetary policy, which allayed fears of interest rates staying higher for longer than expected (read: 5 Stocks That Powered S&P 500 ETF Last Week).
The solid trend is likely to continue, given a bullish signal. 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) and SPDR Portfolio S&P 500 ETF (SPLG - Free Report) .
The retreat in bond yields, which are inversely related to bond prices, has been a significant contributor to the rally. The Fed voted to hold interest rates at their highest range in 22 years at the conclusion of its latest policy meeting and investors bet that the central bank may be done hiking. This has specifically benefited technology stocks, with major companies like Salesforce, Apple and Microsoft seeing their shares rise.
Despite caution from hawkish Fed members, most traders are betting against a rate hike this year, with some expecting a rate cut by March. According to the CME FedWatch tool, 90% of traders are sticking with their bets that there won't be a hike this year, and 25% expect a rate cut in March.
Additionally, the fall in oil prices has lent support to the stock market upturn. Concerns about demand, especially from China and the United States, have led to a decrease in oil prices, which in turn could help to ease inflation worries and bolster investor confidence.
Further, better-than-expected earnings added to the strength. With more than 88% of the third-quarter results already out, earnings are poised to grow despite the significant energy sector drag, which follows three back-to-back quarters of declines (read: Q3 Earnings Midway: 5 Sector ETFs to Bet on Revenue Growth).
A rare bullish stock market indicator just flashed, signaling that the S&P 500's rally that started in October 2022 has room to go higher. The Zweig Breadth Thrust Indicator was triggered on Nov 3 after the S&P 500 rose 6% in its biggest weekly gain of the year. This is the 18th time the indicator has flashed since 1945, according to data from Carson Group's Ryan Detrick and Ned Davis Research.
This rare signal is simply stocks moving from very oversold to overbought in less than two weeks. When the indicator flashes, it "represents a sudden and swift improvement in breadth conditions after they have been beaten down."
ETF Picks
SPDR S&P 500 ETF Trust (SPY - Free Report)
SPDR S&P 500 ETF Trust tracks the S&P 500 Index and holds 503 stocks in its basket, with each accounting for no more than 7.3% of the 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 75 million shares. It has AUM of $408.5 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 $356 million, iShares Core S&P 500 ETF is much smaller than SPY and less liquid, trading in an average daily volume of 4.2 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 $333.7 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 4.4 million shares and has a Zacks ETF Rank #2 with a Medium risk outlook (read: 5 Hottest ETFs of the Best Week of 2023).
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 0.02% in expense ratio. It has amassed $21.2 billion in its asset base and trades in a solid volume of 4.3 million shares a day, on average. SPDR Portfolio S&P 500 ETF has a Zacks ETF Rank #2.