Optimism has been sweeping the broader market since mid-October, when the United States and China announced the phase-one trade deal, after months of wrangling. The S&P 500 and the Nasdaq have hit several highs in this process.
And as soon as the Santa rally kicked in, the tech-heavy Nasdaq index hit the 9000-mark on Dec 26, backed by Amazon (AMZN - Free Report) , Apple (AAPL - Free Report) and trade deal hopes. The Nasdaq index has now logged its 11th straight positive return, marking “its longest winning streak since 2009.”
Inside the Drivers
Per Mastercard (M), holiday retail sales surged 3.4%, with online sales jumping 18.8%, marking a faster e-commerce pace than last year. E-commerce sales accounted for about 14.6% of total retail. Amazon reported record holiday sales this year. Its shares gained 4.5% on Boxing Day, while Apple, another beneficiary of Holiday season 2019, added more than 1.9%.
Apple deserves a special mention here. Notably, a slew of new gadgets, solid demand for AirPods and iPhone 11 may boost the tech behemoth’s earnings in the fourth quarter. Hopes of an imminent U.S-Sino trade deal is another positive (read: After a Sweet November, Apple ETFs are Set for a Warm December).
Decent earnings releases, better-than-expected third-quarter U.S. GDP data, easy global monetary policy, a biotech rally and easing Brexit tensions have also been aiding the market. A pickup in the global economy is great for cyclical sectors like technology and consumer discretionary, which the Nasdaq is heavy on. After all, with U.S. economic growth appearing at a pretty good clip in the ongoing quarter and job growth steady, it makes sense to ride out the amazing growth momentum.
Per the Earnings Trends issued on Dec 4, about 97% of the technology sector of the S&P 500 reported earnings, with a blended beat ratio of 60%. The consumer discretionary sector has come up with a blended beat ratio of 56.3%, with the space recording expansion in earnings as well as revenues.
ETFs to Benefit
For investors interested in riding out this uptrend in the Nasdaq, we suggest a few ETFs that track this key American index.
Invesco QQQ ETF (QQQ - Free Report)
The underlying Nasdaq-100 Index includes 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization. The Zacks Rank #1 (Strong Buy) fund charges 20 bps in fees (read: 4 Sector ETFs That Beat the Market in Q4).
Invesco DWA NASDAQ Momentum ETF
The underlying Dorsey Wright NASDAQ Technical Leaders Index is chosen from a universe of approximately 1,000 common stocks having the largest market capitalizations and traded on the NASDAQ exchange. The fund charges 60 bps in fees.
First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW - Free Report)
The underlying NASDAQ-100 Equal Weighted Index is the equal-weighted version of the NASDAQ-100 Index, which includes 100 of the largest non-financial securities listed on NASDAQ based on market capitalization. The fund charges 60 bps in fees.
Fidelity NASDAQ Composite Index Tracking Stock Fund (ONEQ - Free Report)
The underlying Nasdaq Composite Index is the market capitalization-weighted index of over 3,300 common equities listed on the Nasdaq stock exchange. The fund carries a Zacks Rank #2 (Buy), currently.
Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE - Free Report)
The underlying NASDAQ-100 Equal Weighted Index consists of companies in the NASDAQ-100 Index but each of the securities is initially set at a weight of 1.00% of the Index. The fund charges 35 bps in fees.
ProShares UltraPro QQQ (TQQQ - Free Report)
The fund offers daily investment results, before fees and expenses, that correspond to triple the daily performance of the NASDAQ-100 Index.
Megacap 300 Growth Index ETF Vanguard (MGK - Free Report)
Since Nasdaq rally points toward a high-momentum in growth investing, growth stocks will benefit from this trend. This Zacks #1 Ranked fund MGK measures performances of mega-capitalization growth stocks in the United States. The fund charges 7 bps in fees.
iShares Russell Top 200 Growth ETF (IWY - Free Report)
The Zacks Rank #1 fund follows the Russell Top 200 Growth Index. The fund charges 20 bps in fees.
SPDR Portfolio S&P 500 Growth ETF (SPYG - Free Report)
This Zacks Rank #1 fund follows the S&P 500 Growth Index, which measures the performance of the large-capitalization growth sector in the U.S. equity market (read: ETF Strategies to Ride the Wall Street Bull Run).
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