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5 Best Investing Areas of Q4 & Their Top ETFs

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Wall Street is ending the fourth quarter on a sweet note. After a Downbeat October 2023, stocks surged in November and December on the hopes of Fed rate cuts in 2024, falling inflation, decent corporate earnings and lower oil prices. 

Overall, Wall Street is hovering at record highs currently with global markets too moving along. The S&P 500, the Dow Jones and the Nasdaq Composite added about 10.1%, 10.1% and 13.5%, respectively, in the past three months (as of Dec 22, 2023).

Against this backdrop, below we highlight a few top ETFs of the fourth quarter.


Poland – iShares MSCI Poland ETF (EPOL - Free Report) ) – Up 32.6%

Poland's GDP grew 1.5% sequentially in Q3 of 2023, slightly above a preliminary estimate of 1.4% and accelerating from a 0.3% expansion in Q2. Investors remained hopeful on the country’s equity market potential. The National Bank of Poland even cut rates this year, going opposite to what the Fed is doing in America. This was a welcoming move for the Polish stock market.

The National Bank of Poland cut its benchmark rate a quarter of a percentage point to 5.75% in early October, hinting at a drop in inflation despite a still-high rate of 8.2% last month. Inflation was over 18% earlier this year (read: 6 Country ETFs that Topped S&P 500 in 2023).

Homebuilding – iShares U.S. Home Construction ETF (ITB - Free Report) ) – Up 28.9%

The homebuilding sector of the broad stock market has been an area to watch lately, given the decline in mortgage rates. The Fed also indicated about the possibility of 75 bps of rate cut in 2024, propelling the demand for rate-sensitive homebuilding sector.

Banks – First Trust NASDAQ ABA Community Bank ETF (QABA - Free Report) – Up 28.5%

The journey this year for bank ETFs has been anything but smooth. However, the tables are probably turning for the segment as the rates are peaking and the yield curve is steepening. The regional bank crisis is largely contained.  Regional deposits and loans also rose lately. The surge in sentiment can be seen in the future as well, as the Fed has given indication that rates have been peaking. Plus, robust consumer and commercial banking businesses and solid loan balance have supported big banks this year (read: 4 Reasons Why Bank ETFs Can Rebound in 2024).

Consumer Discretionary – Invesco Dorsey Wright Consumer Cyclicals Momentum ETF (PEZ - Free Report) – Up 28.3%

Americans are feeling more confident about the economy than they did over the past few months. This is especially true as consumer sentiment rebounded sharply in early December as worries about inflation receded. Rising consumer sentiment bodes well for household spending in the coming months. It is expected to have a positive impact on the consumer discretionary sector, which attracts a major portion of consumer spending (read: ETFs Set to Gain Amid Robust Holiday Consumer Sentiment).

SemiconductorInvesco PHLX Semiconductor ETF (SOXQ - Free Report) – Up 23.2%

Semiconductor stocks have recorded a huge rise this year, driven by the boom in AI, with these firms supplying essential tools and equipment for the flourishing AI industry. The AI bonanza has been prevalent in Q4 too.

Notably, semiconductor ETFs are also the best-performing ETFs of the last 10 years, as chips—the basic building blocks of computation—have become integral in everything from smartphones to cars, laptops, PCs, video games, and data centers.



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