We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 ETF Sectors Hitting 52-Week Highs After Fed Rate Cut
Read MoreHide Full Article
The Federal Reserve started the new rate cycle era last week, infusing strong optimism in various areas of the global markets and commodities. Wall Street has been hovering around a 52-week high. While the gains were broad-based, some areas were the biggest gainers and hit a 52-week high each on Sept. 20, 2024. We have highlighted three ETF areas that came to the forefront due to the Fed-induced rally.
Inside the Latest Fed Rate Cut
On Wednesday, the Fed announced a 50-basis-point cut in interest rates, marking its first reduction since March 2020. The new benchmark policy rate now stands between 4.75% and 5.00%. The rate cut was widely anticipated, though there was uncertainty over its size. A 25-basis-point reduction was expected by many, but softer-than-expected economic data led to calls for a larger cut. Ultimately, the Fed opted for the half-percentage-point reduction.
Further Rate Cuts Expected by Year-End
The Federal Open Market Committee’s (FOMC) “dot plot” of individual officials’ projections indicates the possibility of another 50 basis points of cuts by the end of the year, aligning with market expectations. The committee also forecasts an additional percentage point of cuts by 2025 and another half-point cut by 2026, eventually reducing the benchmark rate by 2 percentage points.
Against this backdrop, below we highlight a few winning exchange-traded funds (ETF) areas.
Winning ETF Sectors
Utilities ETF
The Utility sector tends to be stable and provides consistent dividends. This sector also performs better in a low-rate environment. Virtus Reaves Utilities ETF (UTES - Free Report) , S&P 500 Utilities Sector SPDR (XLU - Free Report) and Fidelity Utilities MSCI ETF (FUTY - Free Report) are the utilities ETFs that hit a 52-week high on Sept. 20, 2024 (read: Fed Cuts Rates by 50 Basis Points: Sector ETFs to Play).
India ETF
India ETFs are also hitting highs. Franklin India ETF (FLIN - Free Report) , India Internet & Ecommerce ETF (INQQ - Free Report) , First Trust India Nifty 50 Equal Weight ETF (NFTY - Free Report) and Columbia India Consumer ETF (INCO), probably saw a spike on the likelihood of a falling U.S. dollar.
India's potential for growth makes it an attractive choice for investors. Recent upgrades in growth forecasts for the country, driven by robust public investment and strong private consumption, have boosted the prospects for these ETFs.
Consumers in India are expected to increase their spending on both essential and non-essential items per the country’s central bank, a trend likely to continue over the next year. The forecasted rise in consumer consumption in the upcoming festive season is a tailwind.
Gold ETF
Gold bullion ETFs like iShares Gold Trust Micro (IAUM - Free Report) , GraniteShares Gold Trust Shares (BAR), Vaneck Merk Gold ETF (OUNZ - Free Report) and Physical Gold ETF (SGOL - Free Report) have hit a 52-week high lately. As the Fed eased its policy, the greenback lost strength and bond yields fell. Both factors should go in favor of gold investing.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
3 ETF Sectors Hitting 52-Week Highs After Fed Rate Cut
The Federal Reserve started the new rate cycle era last week, infusing strong optimism in various areas of the global markets and commodities. Wall Street has been hovering around a 52-week high. While the gains were broad-based, some areas were the biggest gainers and hit a 52-week high each on Sept. 20, 2024. We have highlighted three ETF areas that came to the forefront due to the Fed-induced rally.
Inside the Latest Fed Rate Cut
On Wednesday, the Fed announced a 50-basis-point cut in interest rates, marking its first reduction since March 2020. The new benchmark policy rate now stands between 4.75% and 5.00%. The rate cut was widely anticipated, though there was uncertainty over its size. A 25-basis-point reduction was expected by many, but softer-than-expected economic data led to calls for a larger cut. Ultimately, the Fed opted for the half-percentage-point reduction.
Further Rate Cuts Expected by Year-End
The Federal Open Market Committee’s (FOMC) “dot plot” of individual officials’ projections indicates the possibility of another 50 basis points of cuts by the end of the year, aligning with market expectations. The committee also forecasts an additional percentage point of cuts by 2025 and another half-point cut by 2026, eventually reducing the benchmark rate by 2 percentage points.
Against this backdrop, below we highlight a few winning exchange-traded funds (ETF) areas.
Winning ETF Sectors
Utilities ETF
The Utility sector tends to be stable and provides consistent dividends. This sector also performs better in a low-rate environment. Virtus Reaves Utilities ETF (UTES - Free Report) , S&P 500 Utilities Sector SPDR (XLU - Free Report) and Fidelity Utilities MSCI ETF (FUTY - Free Report) are the utilities ETFs that hit a 52-week high on Sept. 20, 2024 (read: Fed Cuts Rates by 50 Basis Points: Sector ETFs to Play).
India ETF
India ETFs are also hitting highs. Franklin India ETF (FLIN - Free Report) , India Internet & Ecommerce ETF (INQQ - Free Report) , First Trust India Nifty 50 Equal Weight ETF (NFTY - Free Report) and Columbia India Consumer ETF (INCO), probably saw a spike on the likelihood of a falling U.S. dollar.
India's potential for growth makes it an attractive choice for investors. Recent upgrades in growth forecasts for the country, driven by robust public investment and strong private consumption, have boosted the prospects for these ETFs.
Consumers in India are expected to increase their spending on both essential and non-essential items per the country’s central bank, a trend likely to continue over the next year. The forecasted rise in consumer consumption in the upcoming festive season is a tailwind.
Gold ETF
Gold bullion ETFs like iShares Gold Trust Micro (IAUM - Free Report) , GraniteShares Gold Trust Shares (BAR), Vaneck Merk Gold ETF (OUNZ - Free Report) and Physical Gold ETF (SGOL - Free Report) have hit a 52-week high lately. As the Fed eased its policy, the greenback lost strength and bond yields fell. Both factors should go in favor of gold investing.