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.
The S&P 500 hit a new high for the year last week after the November jobs report and University of Michigan consumer survey data indicated a resilient economy and cooling inflation, triggering bets over a so-called soft-landing scenario.
Last week, the S&P 500 added 0.2%, the Nasdaq gained 0.7%, the Dow Jones nudged up 0.01% and the Russell 2000 jumped 0.98%. With this, the S&P 500 marked the six-week winning streak.
Inside the Data Points
The latest consumer sentiment survey from the University of Michigan indicated that consumers expect inflation to sit at 3.1% in a year, a decrease from last month's expectation of 4.5%. December's reading marked the lowest since March 2021 and is slightly above the 2.3% to 3.0% range seen in the two years before the pandemic.
Expectations for long-run inflation slumped to 2.8%, down from November's 3.2%, which was the highest reading since 2011. The overall consumer sentiment index jumped 13% in December after four straight months of declines. Consumer sentiment remained at 69.4, above November's reading of 59.8 and the highest since August.
The November U.S. jobs report showed continued resilience in the labor market. U.S. nonfarm payrolls grew by 199,000 last month, the Labor Department said on Friday. That was more than the 190,000 jobs anticipated by economists surveyed by Dow Jones and better than October’s gain of 150,000, per CNBC.
The unemployment rate in the United States declined to 3.7% in November 2023 from 3.9% in the previous month, marking the lowest level since July, and firmly under market expectations that it would remain unchanged at 3.9%.
Decent U.S. GDP growth, a less-hawkish Fed, upbeat holiday season sales, cheaper valuation of small-caps and potential M&A activities should drive small-cap ETFs higher in the near term (read: Are Small-Cap ETFs Poised to Surge in 2024?).
The underlying CRSP US Small Cap Index includes U.S. companies that fall between the bottom 2%-15% of the investable market capitalization. The fund charges 5 bps in fees and yields 1.67% annually.
Global X U.S. Infrastructure Development ETF (PAVE - Free Report) – Zacks Rank #2
Utility companies often are debt-dependent due to their significant infrastructure investments. Lower interest rates reduce the cost of servicing this debt, improving profitability. Moreover, utilities are generally seen as stable, income-generating investments, making them attractive in a low-rate environment
The underlying INDXX U.S. Infrastructure Development Index measure the performance of U.S. listed companies that provide exposure to domestic infrastructure development, including companies involved in construction and engineering; production of infrastructure raw materials, composites and products; industrial transportation; and producers/distributors of heavy construction equipment. The fund charges 47 bps in fees.
Since there are now signs of the Federal Reserve's aggressive interest rate hiking campaign nearing an end and demand for artificial intelligence (AI) applications is robust, chip ETFs should do well.
The underlying Pacer Data Transmission and Communication Revolution Index derive at least 50% of their revenues from one of the following activities related to the use, manipulation, transmission, or storage of data and the ancillary services. The fund charges 60 bps in fees.
If the Fed acts less hawkish or dovish in the coming days, we could see a rally in banking ETFs as the yield curve would be steeper. A steepening yield curve means greater interest rate margins and higher profits for banks.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Play 5 Top-Ranked ETFs for This Week
The S&P 500 hit a new high for the year last week after the November jobs report and University of Michigan consumer survey data indicated a resilient economy and cooling inflation, triggering bets over a so-called soft-landing scenario.
Last week, the S&P 500 added 0.2%, the Nasdaq gained 0.7%, the Dow Jones nudged up 0.01% and the Russell 2000 jumped 0.98%. With this, the S&P 500 marked the six-week winning streak.
Inside the Data Points
The latest consumer sentiment survey from the University of Michigan indicated that consumers expect inflation to sit at 3.1% in a year, a decrease from last month's expectation of 4.5%. December's reading marked the lowest since March 2021 and is slightly above the 2.3% to 3.0% range seen in the two years before the pandemic.
Expectations for long-run inflation slumped to 2.8%, down from November's 3.2%, which was the highest reading since 2011. The overall consumer sentiment index jumped 13% in December after four straight months of declines. Consumer sentiment remained at 69.4, above November's reading of 59.8 and the highest since August.
The November U.S. jobs report showed continued resilience in the labor market. U.S. nonfarm payrolls grew by 199,000 last month, the Labor Department said on Friday. That was more than the 190,000 jobs anticipated by economists surveyed by Dow Jones and better than October’s gain of 150,000, per CNBC.
The unemployment rate in the United States declined to 3.7% in November 2023 from 3.9% in the previous month, marking the lowest level since July, and firmly under market expectations that it would remain unchanged at 3.9%.
ETFs to Tap
Vanguard Small-Cap ETF (VB - Free Report) ) – Zacks Rank #2 (Buy)
Decent U.S. GDP growth, a less-hawkish Fed, upbeat holiday season sales, cheaper valuation of small-caps and potential M&A activities should drive small-cap ETFs higher in the near term (read: Are Small-Cap ETFs Poised to Surge in 2024?).
The underlying CRSP US Small Cap Index includes U.S. companies that fall between the bottom 2%-15% of the investable market capitalization. The fund charges 5 bps in fees and yields 1.67% annually.
Global X U.S. Infrastructure Development ETF (PAVE - Free Report) – Zacks Rank #2
Utility companies often are debt-dependent due to their significant infrastructure investments. Lower interest rates reduce the cost of servicing this debt, improving profitability. Moreover, utilities are generally seen as stable, income-generating investments, making them attractive in a low-rate environment
The underlying INDXX U.S. Infrastructure Development Index measure the performance of U.S. listed companies that provide exposure to domestic infrastructure development, including companies involved in construction and engineering; production of infrastructure raw materials, composites and products; industrial transportation; and producers/distributors of heavy construction equipment. The fund charges 47 bps in fees.
SPDR S&P Semiconductor ETF (XSD - Free Report) ) – Zacks Rank #1 (Strong Buy)
Since there are now signs of the Federal Reserve's aggressive interest rate hiking campaign nearing an end and demand for artificial intelligence (AI) applications is robust, chip ETFs should do well.
The underlying S&P Semiconductor Select Industry Index represents the Semiconductor sub-industry portion of the S&P Total Markets Index (read: Semiconductors Lead Decade's Top Gainers: 3 ETFs Up At Least 550%).
Pacer Data and Digital Revolution ETF (TRFK - Free Report) ) – Zacks Rank #2
The rise of Metaverse with VR, AR, AI and Blockchain should boost the fund. Notably, crypto stocks are in the vogue right now. This is another good news for the space (read: Inside the Volley of Good News in Crypto Realm: ETFs in Focus).
The underlying Pacer Data Transmission and Communication Revolution Index derive at least 50% of their revenues from one of the following activities related to the use, manipulation, transmission, or storage of data and the ancillary services. The fund charges 60 bps in fees.
Financial Select Sector SPDR ETF (XLF - Free Report) ) – Zacks Rank #1
If the Fed acts less hawkish or dovish in the coming days, we could see a rally in banking ETFs as the yield curve would be steeper. A steepening yield curve means greater interest rate margins and higher profits for banks.