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These 5 ETFs Touch New Highs as U.S. Stocks Resume Rally
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Wall Street regained momentum in the recent sessions, driven by solid corporate earnings and renewed bets for Fed rate cuts. In fact, major indices have risen in the last three days, with the S&P 500 notching its best three-day run of 2024.
Many ETFs hit record highs. We have highlighted five from different corners that hit 52-week highs in the latest trading session. These are Roundhill Magnificent Seven ETF (MAGS - Free Report) , First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) , ProShares Online Retail ETF (ONLN - Free Report) , Invesco S&P SmallCap Materials ETF (PSCM - Free Report) and Fidelity Blue Chip Growth ETF (FBCG - Free Report) .
Inside the New Rally
The picture emerging from the first-quarter earnings season continues to be one of steady improvement and resilience, with the earnings growth pace modestly accelerating and estimates for the coming periods starting to increase. Total earnings of the 310 S&P 500 members that have reported first-quarter results have risen 5% from the same period last year on 4.5% higher revenues, with 78.1% beating EPS estimates and 59.4% beating revenue estimates. According to data from Fundstrat, of the 80% of S&P 500 companies that have reported results so far, 81% beat profit estimates by a median of 7%. Meanwhile, 61% of companies beat revenue estimates by a median of 4%.
A softer-than-expected jobs report revived bets for an earlier rate cut from the Federal Reserve. The United States added a lower-than-expected 175,000 jobs last month, and the unemployment rate unexpectedly jumped to 3.9%. After growing for 15 consecutive months, U.S. service sector activity also unexpectedly contracted in April. The futures market is now pricing in at least two interest rate cuts by the end of the year. Traders are now wagering that the central bank will begin trimming rates as soon as September but still maintained only around a 44% probability of such a scenario, according to the CME Fedwatch tool (read: 4 Sector ETFs & Stocks Likely to Benefit Despite Soft Jobs Data).
In another recent weak data, consumer confidence dropped last month to the lowest level since mid-2022. Additionally, the world's biggest economy had a weak start to the year due to lower consumer and government spending amid growing inflation. The economy expanded at the slowest pace in two years, with GDP rising 1.6% annually in the first quarter.
While the weak data has pushed up bets for sooner-than-expected rate cuts lately, the Fed signaled that its fight against inflation will continue for a longer period, setting the stage for a period of extended higher rates. In its latest meeting, the Fed kept interest rates steady at a 23-year high in the range of 5.25% to 5.5%, citing a “lack of further progress” on inflation. Powell reiterated that it will now take longer than expected for the Fed to reach the confidence that inflation is moving sustainably down to 2%. This indicates that rate cuts are not in the cards anytime soon.
Here, we have discussed the abovementioned ETFs in detail with reasons for their strong performance.
Big tech stocks are back on track after seeing deep drops last month. The stocks are at the forefront of the new rally with the return of AI frenzy and Fed’s no rate hike view amid sticky inflation. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for further initiatives when interest rates are low.
Roundhill Magnificent Seven ETF is the first-ever ETF that offers investors equal-weight exposure to the “Magnificent Seven” stocks. It has amassed $260.9 million in its asset base and charges 29 bps in fees per year. MAGS trades in an average daily volume of 200,000 shares (read: Should You Buy the Dip in Magnificent 7 ETFs Before Q1 Earnings?).
First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) – 52-Week High: $67.98
Lower interest rates will lead to reduced borrowing costs, helping businesses to expand their operations more easily and resulting in increased profitability. First Trust RBA American Industrial Renaissance ETF offers exposure to small and mid-cap securities in the industrial and community banking sectors by tracking the Richard Bernstein Advisors American Industrial Renaissance Index. It holds 45 stocks in its basket and charges 70 bps in annual fees.
First Trust RBA American Industrial Renaissance ETF has $929 million in AUM and trades in a good volume of around 103,000 shares per day on average. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
Online retail ETF saw smooth trading, primarily on blockbuster Amazon (AMZN) earnings. The e-commerce giant beat both earnings and revenue estimates driven by growth in its advertising and AI-powered cloud computing business. Amazon is the top firm in ONLN with 24% of the assets (read: ETFs to Tap Amazon's Q1 Earnings Beat, AI Growth).
ProShares Online Retail ETF offers exposure to companies that principally sell online or through other non-store channels and then zeros in on the companies that reshape the retail space. It tracks the ProShares Online Retail Index, holding 18 stocks in its basket. ProShares Online Retail ETF has amassed $94.9 million in its asset base and currently trades in a moderate volume of around 16,000 shares a day on average. It charges 58 bps in annual fees from investors.
Stocks in the materials sector also got a strong boost propelled by rate cut hopes. PSCM offers exposure to companies that are principally engaged in producing raw materials, including paper or wood products, chemicals, construction materials, and mining and metals. It follows the S&P SmallCap 600 Capped Materials Index, holding 33 securities in its basket. Invesco S&P SmallCap Materials ETF has an AUM of $16.2 million and trades in a volume of 1,000 shares a day on average. It charges 29 bps in annual fees and has a Zacks ETF Rank #3 with a High risk outlook.
Fidelity Blue Chip Growth ETF invests in blue-chip companies (well-known, well-established and well-capitalized), which generally have large or medium market capitalizations. These companies have above-average growth potential (stocks of these companies are often called "growth" stocks). Fidelity Blue Chip Growth ETF holds 194 securities in its basket with AUM of $1.4 billion. It charges 59 bps in annual fees and trades in an average daily volume of 376,000 shares.
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These 5 ETFs Touch New Highs as U.S. Stocks Resume Rally
Wall Street regained momentum in the recent sessions, driven by solid corporate earnings and renewed bets for Fed rate cuts. In fact, major indices have risen in the last three days, with the S&P 500 notching its best three-day run of 2024.
Many ETFs hit record highs. We have highlighted five from different corners that hit 52-week highs in the latest trading session. These are Roundhill Magnificent Seven ETF (MAGS - Free Report) , First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) , ProShares Online Retail ETF (ONLN - Free Report) , Invesco S&P SmallCap Materials ETF (PSCM - Free Report) and Fidelity Blue Chip Growth ETF (FBCG - Free Report) .
Inside the New Rally
The picture emerging from the first-quarter earnings season continues to be one of steady improvement and resilience, with the earnings growth pace modestly accelerating and estimates for the coming periods starting to increase. Total earnings of the 310 S&P 500 members that have reported first-quarter results have risen 5% from the same period last year on 4.5% higher revenues, with 78.1% beating EPS estimates and 59.4% beating revenue estimates. According to data from Fundstrat, of the 80% of S&P 500 companies that have reported results so far, 81% beat profit estimates by a median of 7%. Meanwhile, 61% of companies beat revenue estimates by a median of 4%.
A softer-than-expected jobs report revived bets for an earlier rate cut from the Federal Reserve. The United States added a lower-than-expected 175,000 jobs last month, and the unemployment rate unexpectedly jumped to 3.9%. After growing for 15 consecutive months, U.S. service sector activity also unexpectedly contracted in April. The futures market is now pricing in at least two interest rate cuts by the end of the year. Traders are now wagering that the central bank will begin trimming rates as soon as September but still maintained only around a 44% probability of such a scenario, according to the CME Fedwatch tool (read: 4 Sector ETFs & Stocks Likely to Benefit Despite Soft Jobs Data).
In another recent weak data, consumer confidence dropped last month to the lowest level since mid-2022. Additionally, the world's biggest economy had a weak start to the year due to lower consumer and government spending amid growing inflation. The economy expanded at the slowest pace in two years, with GDP rising 1.6% annually in the first quarter.
While the weak data has pushed up bets for sooner-than-expected rate cuts lately, the Fed signaled that its fight against inflation will continue for a longer period, setting the stage for a period of extended higher rates. In its latest meeting, the Fed kept interest rates steady at a 23-year high in the range of 5.25% to 5.5%, citing a “lack of further progress” on inflation. Powell reiterated that it will now take longer than expected for the Fed to reach the confidence that inflation is moving sustainably down to 2%. This indicates that rate cuts are not in the cards anytime soon.
Here, we have discussed the abovementioned ETFs in detail with reasons for their strong performance.
Roundhill Magnificent Seven ETF (MAGS - Free Report) – 52-Week High: $40.38
Big tech stocks are back on track after seeing deep drops last month. The stocks are at the forefront of the new rally with the return of AI frenzy and Fed’s no rate hike view amid sticky inflation. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for further initiatives when interest rates are low.
Roundhill Magnificent Seven ETF is the first-ever ETF that offers investors equal-weight exposure to the “Magnificent Seven” stocks. It has amassed $260.9 million in its asset base and charges 29 bps in fees per year. MAGS trades in an average daily volume of 200,000 shares (read: Should You Buy the Dip in Magnificent 7 ETFs Before Q1 Earnings?).
First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) – 52-Week High: $67.98
Lower interest rates will lead to reduced borrowing costs, helping businesses to expand their operations more easily and resulting in increased profitability. First Trust RBA American Industrial Renaissance ETF offers exposure to small and mid-cap securities in the industrial and community banking sectors by tracking the Richard Bernstein Advisors American Industrial Renaissance Index. It holds 45 stocks in its basket and charges 70 bps in annual fees.
First Trust RBA American Industrial Renaissance ETF has $929 million in AUM and trades in a good volume of around 103,000 shares per day on average. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
ProShares Online Retail ETF (ONLN - Free Report) – 52-Week High: $41.32
Online retail ETF saw smooth trading, primarily on blockbuster Amazon (AMZN) earnings. The e-commerce giant beat both earnings and revenue estimates driven by growth in its advertising and AI-powered cloud computing business. Amazon is the top firm in ONLN with 24% of the assets (read: ETFs to Tap Amazon's Q1 Earnings Beat, AI Growth).
ProShares Online Retail ETF offers exposure to companies that principally sell online or through other non-store channels and then zeros in on the companies that reshape the retail space. It tracks the ProShares Online Retail Index, holding 18 stocks in its basket. ProShares Online Retail ETF has amassed $94.9 million in its asset base and currently trades in a moderate volume of around 16,000 shares a day on average. It charges 58 bps in annual fees from investors.
Invesco S&P SmallCap Materials ETF (PSCM - Free Report) – 52-Week High: $78.05
Stocks in the materials sector also got a strong boost propelled by rate cut hopes. PSCM offers exposure to companies that are principally engaged in producing raw materials, including paper or wood products, chemicals, construction materials, and mining and metals. It follows the S&P SmallCap 600 Capped Materials Index, holding 33 securities in its basket. Invesco S&P SmallCap Materials ETF has an AUM of $16.2 million and trades in a volume of 1,000 shares a day on average. It charges 29 bps in annual fees and has a Zacks ETF Rank #3 with a High risk outlook.
Fidelity Blue Chip Growth ETF (FBCG - Free Report) – 52-Week High: $38.99
Fidelity Blue Chip Growth ETF invests in blue-chip companies (well-known, well-established and well-capitalized), which generally have large or medium market capitalizations. These companies have above-average growth potential (stocks of these companies are often called "growth" stocks). Fidelity Blue Chip Growth ETF holds 194 securities in its basket with AUM of $1.4 billion. It charges 59 bps in annual fees and trades in an average daily volume of 376,000 shares.