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Wall Street delivered a mixed performance in the past six months. While July 2023 was upbeat for Wall Street, the following three months registered declines (the first time since the onset of the COVID-19 pandemic in March 2020). Then, Wall Street underwent a significant resurgence in the final two months of 2023.
This resurgence was primarily driven by the optimism generated by Federal Reserve Chairman Jerome Powell's moderately dovish statements. Investors expected about 75 bps of rate cuts sometime this year.
However, U.S. equities are off to a dismal start in 2024 as the latest Fed minutes have not offered a clear view of an imminent reduction in interest rates. So far this year, U.S. markets have been a little off with the S&P 500 losing about 1% and the Nasdaq-100 shedding about 2.3%.
Given this, we have highlighted five ETFs that have been in the red in the past six months but have a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy). Notably, the S&P 500 has gained about 5.5% in the past six months.
ETFs in Focus
First Trust NASDAQ Transportation ETF (FTXR - Free Report) ) – Zacks Rank #2 (Buy); Down 2.5% Past 6 Months
The Fed is likely to halt rate hikes even if it is cutting the same soon, given the moderation in price inflation. This ensures more activities in the economy, which will likely bolster the transportation stocks.
The underlying Nasdaq U.S. Smart Transportation Index is a modified factor weighted index designed to provide exposure to U.S. companies within the transportation industry. The fund charges 60 bps in fees.
First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID - Free Report) ) – Zacks Rank #2; Down 3.7% Past Six Months
Leading countries of the world are currently focusing on immediate and dramatic climate action, including a significant reduction in greenhouse gas emissions, achieving global net zero emissions by 2050, transitioning from fossil fuels to renewable energy sources, and increasing investments in climate adaptation and resilience. This has made clean energy stocks and ETFs a solid bet (read: What Does COP 28 Mean for Renewable Energy ETFs?).
The underlying NASDAQ OMX Clean Edge Smart Grid Infrastructure Index includes companies that are primarily engaged and involved in electric grid, electric meters and devices, networks, energy storage and management, and in enabling software used by the smart grid infrastructure sector. The fund charges 58 bps in fees.
The technology sector has been an area to watch lately, given the euphoria surrounding the Fed’s dovish tone. The central bank has penciled in three rate cuts of 75 bps for 2024. The potential reductions in interest rates, coupled with the ongoing rise of AI, act as a major tailwind.
The underlying Dorsey Wright Technology Technical Leaders Index identifies companies that are showing relative strength and are composed of at least 30 common stocks from a universe of approximately 3,000 common stocks traded on U.S. exchanges. The fund charges 60 bps in fees.
SPDR S&P Kensho Final Frontiers ETF (ROKT - Free Report) ) – Zacks Rank #2; Down 0.4%
Investments in "final frontier" technologies are expected to grow in 2024 for several reasons, including continuous breakthroughs in areas like AI, space exploration, biotechnology, and quantum computing. Challenges like climate change, healthcare, and resource scarcity are driving investment in technologies that offer solutions to such crises. Many governments are incentivizing research and development in cutting-edge technologies through grants, tax breaks, and supportive regulations.
The S&P Kensho Final Frontiers Index comprises U.S.-listed equity securities of companies domiciled across developed and emerging markets worldwide that are included in the Final Frontiers sector. The fund charges 45 bps in fees.
Semiconductor stocks provide vital components for AI development. With chips playing a crucial role in various products, from smartphones to data centers and the AI mania remaining strong, the chip space has every reason to outperform ahead.
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 fund charges 35 bps in fees.
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5 Top-Ranked Beaten-Down ETFs to Rebound in 2024
Wall Street delivered a mixed performance in the past six months. While July 2023 was upbeat for Wall Street, the following three months registered declines (the first time since the onset of the COVID-19 pandemic in March 2020). Then, Wall Street underwent a significant resurgence in the final two months of 2023.
This resurgence was primarily driven by the optimism generated by Federal Reserve Chairman Jerome Powell's moderately dovish statements. Investors expected about 75 bps of rate cuts sometime this year.
However, U.S. equities are off to a dismal start in 2024 as the latest Fed minutes have not offered a clear view of an imminent reduction in interest rates. So far this year, U.S. markets have been a little off with the S&P 500 losing about 1% and the Nasdaq-100 shedding about 2.3%.
Given this, we have highlighted five ETFs that have been in the red in the past six months but have a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy). Notably, the S&P 500 has gained about 5.5% in the past six months.
ETFs in Focus
First Trust NASDAQ Transportation ETF (FTXR - Free Report) ) – Zacks Rank #2 (Buy); Down 2.5% Past 6 Months
The Fed is likely to halt rate hikes even if it is cutting the same soon, given the moderation in price inflation. This ensures more activities in the economy, which will likely bolster the transportation stocks.
The underlying Nasdaq U.S. Smart Transportation Index is a modified factor weighted index designed to provide exposure to U.S. companies within the transportation industry. The fund charges 60 bps in fees.
First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID - Free Report) ) – Zacks Rank #2; Down 3.7% Past Six Months
Leading countries of the world are currently focusing on immediate and dramatic climate action, including a significant reduction in greenhouse gas emissions, achieving global net zero emissions by 2050, transitioning from fossil fuels to renewable energy sources, and increasing investments in climate adaptation and resilience. This has made clean energy stocks and ETFs a solid bet (read: What Does COP 28 Mean for Renewable Energy ETFs?).
The underlying NASDAQ OMX Clean Edge Smart Grid Infrastructure Index includes companies that are primarily engaged and involved in electric grid, electric meters and devices, networks, energy storage and management, and in enabling software used by the smart grid infrastructure sector. The fund charges 58 bps in fees.
Invesco Dorsey Wright Technology Momentum ETF (PTF - Free Report) ) – Zacks Rank #1 (Strong Buy); Down 3.0%
The technology sector has been an area to watch lately, given the euphoria surrounding the Fed’s dovish tone. The central bank has penciled in three rate cuts of 75 bps for 2024. The potential reductions in interest rates, coupled with the ongoing rise of AI, act as a major tailwind.
The underlying Dorsey Wright Technology Technical Leaders Index identifies companies that are showing relative strength and are composed of at least 30 common stocks from a universe of approximately 3,000 common stocks traded on U.S. exchanges. The fund charges 60 bps in fees.
SPDR S&P Kensho Final Frontiers ETF (ROKT - Free Report) ) – Zacks Rank #2; Down 0.4%
Investments in "final frontier" technologies are expected to grow in 2024 for several reasons, including continuous breakthroughs in areas like AI, space exploration, biotechnology, and quantum computing. Challenges like climate change, healthcare, and resource scarcity are driving investment in technologies that offer solutions to such crises. Many governments are incentivizing research and development in cutting-edge technologies through grants, tax breaks, and supportive regulations.
The S&P Kensho Final Frontiers Index comprises U.S.-listed equity securities of companies domiciled across developed and emerging markets worldwide that are included in the Final Frontiers sector. The fund charges 45 bps in fees.
SPDR S&P Semiconductor ETF (XSD - Free Report) ) – Zacks Rank #1; Down 4.9%
Semiconductor stocks provide vital components for AI development. With chips playing a crucial role in various products, from smartphones to data centers and the AI mania remaining strong, the chip space has every reason to outperform ahead.
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 fund charges 35 bps in fees.