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5 Best-Performing Top-Ranked ETFs at the Start of May
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After a tumultuous April, Wall Street regained momentum at the start of May, driven by solid corporate earnings and renewed bets for Fed rate cuts. The resurgence in tech stocks with the resumption of the AI craze added to the strength. The rally has been broad-based, with all three major indices just a few points away from their record highs.
The Dow Jones is less than 1.1% off its Mar 28 record close, while the S&P 500 is only 0.8% off its record made on the same day. The Nasdaq is just 0.6% shy of its Apr 11 record close, according to Dow Jones Market Data. In fact, the Dow Jones has risen in all seven sessions of this month, marking its longest winning streak this year. The S&P 500 moved up above the 5,200 level at the close for the first time since Apr 9.
Given this, investors should bet on ETFs that were winners in the past week and have a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy). These are Invesco Oil & Gas Services ETF (PXJ - Free Report) , Invesco Dorsey Wright Industrials Momentum ETF (PRN - Free Report) , SPDR S&P Semiconductor ETF (XSD - Free Report) , Invesco S&P MidCap Momentum ETF (XMMO - Free Report) and Invesco S&P SmallCap Information Technology ETF (PSCT - Free Report) .
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 for the 440 S&P 500 members that have reported first-quarter results have risen 5% from the same period last year on 4.2% higher revenues, with 78.0% beating EPS estimates and 60.9% beating revenue estimates.
According to FactSet, U.S. companies are having their best earnings season in nearly two years. With 80% of the companies in the S&P 500 having already reported, the index is on track to record 5% growth in first-quarter earnings per share. This will be the biggest year-over-year increase since the second quarter of 2022 and higher than 3.2% growth that analysts had expected prior to the start of the season (read: ETFs to Tap the Best Earnings Growth in Two Years).
A softer-than-expected jobs report revived bets for an earlier rate cut from the Federal Reserve. U.S. service sector activity also unexpectedly contracted in April after growing for 15 consecutive months. In another recent weak data, consumer confidence dopped last month to the lowest since mid-2022. Additionally, the United States 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.
We have profiled the abovementioned ETFs in detail below:
Invesco Oil & Gas Services ETF (PXJ - Free Report) – Up 5.3%
Invesco Oil & Gas Services ETF follows the Dynamic Oil Services Intellidex Index, which thoroughly evaluates companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value. It holds 32 stocks in its basket. Invesco Oil & Gas Services ETF has accumulated $94.1 million and charges 63 bps in fees per year. It trades in an average daily volume of 16,000 shares and has a Zacks ETF Rank #2 (read: Top-Ranked Energy ETFs to Ride the Rebound in Oil Prices).
Invesco Dorsey Wright Industrials Momentum ETF provides exposure to 43 industrial companies that are showing relative strength (momentum) and follows the Dorsey Wright Industrials Technical Leaders Index. It is widely spread across construction & engineering, electrical equipment, trading companies & distributors, and building products. Invesco Dorsey Wright Industrials Momentum ETF has accumulated $229.2 million in its asset base and charges 60 bps in annual fees. It trades in an average daily volume of 13,000 shares and has a Zacks ETF Rank #2.
SPDR S&P Semiconductor ETF offers exposure to the semiconductor segment of the broader technology sector and tracks the S&P Semiconductor Select Industry Index. It holds 39 stocks in its portfolio. SPDR S&P Semiconductor ETF has AUM of $1.4 billion and an average daily volume of about 56,000 shares. SPDR S&P Semiconductor ETF charges 35 bps in fees per year and has a Zacks ETF Rank #1 (read: Top-Ranked Energy ETFs to Ride the Rebound in Oil Prices).
Invesco S&P MidCap Momentum ETF follows the S&P Midcap 400 Momentum Index, which is designed to identify mid-cap firms having the highest momentum scores. It holds 79 stocks in its basket, with key holdings in industrials, information technology and consumer discretionary. Invesco S&P MidCap Momentum ETF has AUM of $2.5 billion and charges 34 bps in annual fees. It trades in an average daily volume of 192,000 shares and has a Zacks ETF Rank #2.
Invesco S&P SmallCap Information Technology ETF (PSCT - Free Report) – Up 4.2%
Invesco S&P SmallCap Information Technology ETF offers exposure to companies that are principally engaged in the business of providing information technology-related products and services, including computer hardware and software, Internet, electronics and semiconductors and communication technologies. It follows the S&P SmallCap 600 Capped Information Technology Index, holding 68 securities in its basket. Invesco S&P SmallCap Information Technology ETF has an AUM of $328.6 million and charges 68 bps in annual fees. It has a Zacks ETF Rank #1.
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5 Best-Performing Top-Ranked ETFs at the Start of May
After a tumultuous April, Wall Street regained momentum at the start of May, driven by solid corporate earnings and renewed bets for Fed rate cuts. The resurgence in tech stocks with the resumption of the AI craze added to the strength. The rally has been broad-based, with all three major indices just a few points away from their record highs.
The Dow Jones is less than 1.1% off its Mar 28 record close, while the S&P 500 is only 0.8% off its record made on the same day. The Nasdaq is just 0.6% shy of its Apr 11 record close, according to Dow Jones Market Data. In fact, the Dow Jones has risen in all seven sessions of this month, marking its longest winning streak this year. The S&P 500 moved up above the 5,200 level at the close for the first time since Apr 9.
Given this, investors should bet on ETFs that were winners in the past week and have a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy). These are Invesco Oil & Gas Services ETF (PXJ - Free Report) , Invesco Dorsey Wright Industrials Momentum ETF (PRN - Free Report) , SPDR S&P Semiconductor ETF (XSD - Free Report) , Invesco S&P MidCap Momentum ETF (XMMO - Free Report) and Invesco S&P SmallCap Information Technology ETF (PSCT - Free Report) .
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 for the 440 S&P 500 members that have reported first-quarter results have risen 5% from the same period last year on 4.2% higher revenues, with 78.0% beating EPS estimates and 60.9% beating revenue estimates.
According to FactSet, U.S. companies are having their best earnings season in nearly two years. With 80% of the companies in the S&P 500 having already reported, the index is on track to record 5% growth in first-quarter earnings per share. This will be the biggest year-over-year increase since the second quarter of 2022 and higher than 3.2% growth that analysts had expected prior to the start of the season (read: ETFs to Tap the Best Earnings Growth in Two Years).
A softer-than-expected jobs report revived bets for an earlier rate cut from the Federal Reserve. U.S. service sector activity also unexpectedly contracted in April after growing for 15 consecutive months. In another recent weak data, consumer confidence dopped last month to the lowest since mid-2022. Additionally, the United States 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.
We have profiled the abovementioned ETFs in detail below:
Invesco Oil & Gas Services ETF (PXJ - Free Report) – Up 5.3%
Invesco Oil & Gas Services ETF follows the Dynamic Oil Services Intellidex Index, which thoroughly evaluates companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value. It holds 32 stocks in its basket. Invesco Oil & Gas Services ETF has accumulated $94.1 million and charges 63 bps in fees per year. It trades in an average daily volume of 16,000 shares and has a Zacks ETF Rank #2 (read: Top-Ranked Energy ETFs to Ride the Rebound in Oil Prices).
Invesco Dorsey Wright Industrials Momentum ETF (PRN - Free Report) – Up 5.1%
Invesco Dorsey Wright Industrials Momentum ETF provides exposure to 43 industrial companies that are showing relative strength (momentum) and follows the Dorsey Wright Industrials Technical Leaders Index. It is widely spread across construction & engineering, electrical equipment, trading companies & distributors, and building products. Invesco Dorsey Wright Industrials Momentum ETF has accumulated $229.2 million in its asset base and charges 60 bps in annual fees. It trades in an average daily volume of 13,000 shares and has a Zacks ETF Rank #2.
SPDR S&P Semiconductor ETF (XSD - Free Report) – 4.4%
SPDR S&P Semiconductor ETF offers exposure to the semiconductor segment of the broader technology sector and tracks the S&P Semiconductor Select Industry Index. It holds 39 stocks in its portfolio. SPDR S&P Semiconductor ETF has AUM of $1.4 billion and an average daily volume of about 56,000 shares. SPDR S&P Semiconductor ETF charges 35 bps in fees per year and has a Zacks ETF Rank #1 (read: Top-Ranked Energy ETFs to Ride the Rebound in Oil Prices).
Invesco S&P MidCap Momentum ETF (XMMO - Free Report) – Up 4.4%
Invesco S&P MidCap Momentum ETF follows the S&P Midcap 400 Momentum Index, which is designed to identify mid-cap firms having the highest momentum scores. It holds 79 stocks in its basket, with key holdings in industrials, information technology and consumer discretionary. Invesco S&P MidCap Momentum ETF has AUM of $2.5 billion and charges 34 bps in annual fees. It trades in an average daily volume of 192,000 shares and has a Zacks ETF Rank #2.
Invesco S&P SmallCap Information Technology ETF (PSCT - Free Report) – Up 4.2%
Invesco S&P SmallCap Information Technology ETF offers exposure to companies that are principally engaged in the business of providing information technology-related products and services, including computer hardware and software, Internet, electronics and semiconductors and communication technologies. It follows the S&P SmallCap 600 Capped Information Technology Index, holding 68 securities in its basket. Invesco S&P SmallCap Information Technology ETF has an AUM of $328.6 million and charges 68 bps in annual fees. It has a Zacks ETF Rank #1.