The S&P 500 hit record highs last week, with the index rising for the fourth consecutive week, marking its longest winning streak since March. The index gained 1.5% last week. Meanwhile, the Nasdaq also reached all-time highs, gaining 1.7% while the Dow Jones rose 1.4% and is 0.2% below its record high.
The rally was driven by a better-than-expected earnings season, easing policies, trade deal optimism and a solid jobs report (read: 10 Top-Ranked ETFs Beating S&P 500 This Year).
Solid Earnings Trend
Total earnings for 357 S&P members that reported Q3 results through Nov 1 are down 1.9% on 3.6% higher revenues, with 74.5% beating EPS estimates and 59.7% beating on revenues. While earnings growth is less than what this group of companies witnessed in recent periods, revenue growth is actually in line. The proportion of these companies beating EPS and revenue estimates is also in the historical range.
The Fed continued its monetary easing path and lowered the interest rates by 25 bps for the third time this year to help sustain U.S. growth in the face of slowdown elsewhere in the world. Lower interest rates would make borrowings cheaper, providing a boost to both investment in new projects and repayment of higher-rate debt. As such, it would lead to strong economic growth, and is thus a boon to the stock market. However, the central bank signaled a pause in rate cuts unless the economy takes a turn for the worse (read: Fed Cuts Rates, Signals Pause: Trick or Treat for ETFs?).
Trade talks between the United States and China are progressing well. The Chinese Commerce Ministry said the world’s two largest economies had reached “consensus on principles” during a telephone call between their main trade negotiators and aims to sign the “Phase One” trade deal this month.
The U.S. added 128,000 jobs in October, well above 90,000 that economists had predicted, according to FactSet. Though the unemployment rate edged up to 3.6% from 3.5%, it is still around the lowest level since 1969. The solid report has eased fears of a domestic economic slowdown.
Given the bullishness, we have highlighted six ETFs that gained the most last week.
ARK Genomic Revolution Multi-Sector ETF (ARKG - Free Report) – Up 7.5%
This is an actively managed ETF, focusing on companies likely to benefit from the extension and enhancement of the quality of human and other life by incorporating technological and scientific developments plus improvements and advancements in genomics into their business. With AUM of $411.5 million, the fund holds 38 stocks in its basket with each making up for no more than 10.2% and has 0.75% in expense ratio. It trades in average daily volume of 124,000 shares.
Virtus LifeSci Biotech Clinical Trials ETF (BBC - Free Report) – Up 5.9%
This fund has a novel approach to biotechnology investing with exposure to companies that are in the clinical trial stage. This can easily be done by tracking the LifeSci Biotechnology Clinical Trials Index. BBC has amassed $24.8 million in its asset base and charges 79 bps in fees per year from its investors. It trades in a light average daily volume of around 4,000 shares and holds 96 securities in its basket with each accounting for no more than 2.72% share. The product carries a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Healthcare ETF Tops in October: 5 Best Stocks).
Amplify CrowdBureau Peer-to-Peer Lending & Crowdfunding ETF (LEND - Free Report) – Up 5.7%
This ETF has newly debuted in the space and amassed $1 million in AUM since its inception in May. It tracks the CrowdBureau Peer-to-Peer Lending & Equity Crowdfunding Index, which comprises companies that operate platforms that facilitate P2P lending and investment-based crowdfunding, and provide technology & software for their operations. The product holds 34 stocks in its basket with heavy concentration on the top three firms that collectively account for more than half of the portfolio. It charges 65 bps in annual fees and trades in average daily volume of under 1,000 shares.
SPDR S&P Semiconductor ETF (XSD - Free Report) – Up 5.6%
This ETF offers exposure to the semiconductor corner of the broad tech sector. It tracks the S&P Semiconductor Select Industry Index, holding 35 stocks in its portfolio. The fund has AUM of $401.4 million and charges 35 bps in fees per year. It trades in average daily volume of 119,000 shares and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Time to Buy the Dip in Semiconductor ETFs?).
Pacer Military Times Best Employers ETF (VETS - Free Report) – Up 5.4%
This is a strategy driven ETF that aims to provide exposure to U.S. companies that support training and professional development of military veterans, service members and their families. Holding 36 stocks in its basket, the ETF is widely spread across components with each accounting for no more than 2.5% of assets. It has accumulated $3.1 million in its asset base while trades in volume of less than 1,000 shares per day on average.
3D Printing ETF (PRNT - Free Report) – Up 5.2%
This fund follows the Total 3D-Printing Index, which is designed to track the price movement of stocks from the 3D printing industry. It has a basket of 55 securities with none accounting for 7% of assets. The ETF has amassed $34.4 million in its asset base while trades in average daily volume of 8,000 shares. It charges 66 bps in annual fees.
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