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Tech Leads S&P 500 to Highs: Does Further Rally Await ETFs?
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Wall Street has been in great shape lately, with tech stocks taking the lead. The S&P 500 gained on Thursday after achieving its fourth consecutive record close on Wednesday, while the Nasdaq Composite and Dow Jones Industrial Average had varying performances.
The tech-heavy Nasdaq Composite has been in the pink. Strong earnings, notably from Netflix, contributed to the index's performance, with tech giants like Microsoft and Meta also experiencing gains. The chip equipment manufacturer ASML and software company SAP provided upbeat updates, instilling optimism for a potential resurgence in the chip industry and an AI-driven expansion in the tech sector.
Meanwhile, tech stalwart IBM (IBM) reported a 4% revenue increase on Jan 24, driven by demand for artificial intelligence (AI). IBM came out with quarterly earnings of $3.87 per share, beating the Zacks Consensus Estimate of $3.78 per share. This compares to earnings of $3.60 per share a year ago.
IBM, which belongs to the Zacks Computer - Integrated Systems industry, posted revenues of $17.38 billion for the quarter ended December 2023, surpassing the Zacks Consensus Estimate by 0.59%. This compares to year-ago revenues of $16.69 billion.
Historical Perspective on Market Highs
Creative Planning CEO Peter Mallouk shared a historical chart that suggests investing in the market at all-time highs may be a favorable strategy. The chart indicates that, on average, investments made at record highs tend to perform better over the next five years compared to investments made on other days, as quoted on Yahoo Finance.
Mallouk explained that the market generally trends upward, with occasional periods of decline, challenging the misconception that all-time highs are signals of a looming downturn.
Top-Ranked ETFs in Focus
Against this backdrop, below we highlight a few top-ranked ETFs that could gain ahead.
The underlying PHLX Semiconductor Sector Index measures the performance of the 30 largest U.S.-listed securities of companies engaged in the semiconductor business. The fund charges 19 bps in fees.
The underlying Technology Select Sector Index includes companies from the following industries: computers & peripherals; software; diversified telecommunication services; communications equipment; semiconductor & semiconductor equipment; internet software & services; IT services; wireless telecommunication services; electronic equipment & instruments; and office electronics. The fund charges 10 bps in fees.
The underlying Communication Services Select Sector Index seeks to provide an effective representation of the communication services sector of the S&P 500 Index. The fund charges 10 bps in fees.
One-month Performance: Up 4.28% Past Month
P/E (36 Months): 17.87X
Invesco Next Gen Connectivity ETF (KNCT - Free Report) – Zacks Rank #2
The underlying STOXX World AC NexGen Connectivity Index is comprised of companies with significant exposure to technologies or products that contribute to future connectivity through direct revenue. The fund charges 40 bps in fees.
The underlying Dow Jones U.S. Select Pharmaceuticals Index is free-float adjusted market capitalization-weighted index. It includes pharmaceutical companies such as manufacturers of prescription or over-the-counter drugs or vaccines, but excludes producers of vitamins.
One-month Performance: Up 3.96% Past Month
P/E (36 Months): 17.82X
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Tech Leads S&P 500 to Highs: Does Further Rally Await ETFs?
Wall Street has been in great shape lately, with tech stocks taking the lead. The S&P 500 gained on Thursday after achieving its fourth consecutive record close on Wednesday, while the Nasdaq Composite and Dow Jones Industrial Average had varying performances.
The tech-heavy Nasdaq Composite has been in the pink. Strong earnings, notably from Netflix, contributed to the index's performance, with tech giants like Microsoft and Meta also experiencing gains. The chip equipment manufacturer ASML and software company SAP provided upbeat updates, instilling optimism for a potential resurgence in the chip industry and an AI-driven expansion in the tech sector.
Meanwhile, tech stalwart IBM (IBM) reported a 4% revenue increase on Jan 24, driven by demand for artificial intelligence (AI). IBM came out with quarterly earnings of $3.87 per share, beating the Zacks Consensus Estimate of $3.78 per share. This compares to earnings of $3.60 per share a year ago.
IBM, which belongs to the Zacks Computer - Integrated Systems industry, posted revenues of $17.38 billion for the quarter ended December 2023, surpassing the Zacks Consensus Estimate by 0.59%. This compares to year-ago revenues of $16.69 billion.
Historical Perspective on Market Highs
Creative Planning CEO Peter Mallouk shared a historical chart that suggests investing in the market at all-time highs may be a favorable strategy. The chart indicates that, on average, investments made at record highs tend to perform better over the next five years compared to investments made on other days, as quoted on Yahoo Finance.
Mallouk explained that the market generally trends upward, with occasional periods of decline, challenging the misconception that all-time highs are signals of a looming downturn.
Top-Ranked ETFs in Focus
Against this backdrop, below we highlight a few top-ranked ETFs that could gain ahead.
Invesco PHLX Semiconductor ETF (SOXQ - Free Report) – Zacks Rank #1 (Strong Buy)
The underlying PHLX Semiconductor Sector Index measures the performance of the 30 largest U.S.-listed securities of companies engaged in the semiconductor business. The fund charges 19 bps in fees.
One-month Performance: Up 6.85% Past Month
P/E (36 Months): 24.40X
Technology Select Sector SPDR ETF (XLK - Free Report) – Zacks Rank #1
The underlying Technology Select Sector Index includes companies from the following industries: computers & peripherals; software; diversified telecommunication services; communications equipment; semiconductor & semiconductor equipment; internet software & services; IT services; wireless telecommunication services; electronic equipment & instruments; and office electronics. The fund charges 10 bps in fees.
One-month Performance: Up 5.11% Past Month
P/E (36 Months): 28.37X
Communication Services Select Sector SPDR ETF (XLC - Free Report) – Zacks Rank #2 (Buy)
The underlying Communication Services Select Sector Index seeks to provide an effective representation of the communication services sector of the S&P 500 Index. The fund charges 10 bps in fees.
One-month Performance: Up 4.28% Past Month
P/E (36 Months): 17.87X
Invesco Next Gen Connectivity ETF (KNCT - Free Report) – Zacks Rank #2
The underlying STOXX World AC NexGen Connectivity Index is comprised of companies with significant exposure to technologies or products that contribute to future connectivity through direct revenue. The fund charges 40 bps in fees.
One-month Performance: Up 4.20% Past Month
P/E (36 Months): 22.70X
iShares U.S. Pharmaceuticals ETF (IHE - Free Report) – Zacks Rank #2
The underlying Dow Jones U.S. Select Pharmaceuticals Index is free-float adjusted market capitalization-weighted index. It includes pharmaceutical companies such as manufacturers of prescription or over-the-counter drugs or vaccines, but excludes producers of vitamins.
One-month Performance: Up 3.96% Past Month
P/E (36 Months): 17.82X