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4 Sector ETF Winners of Bull Market Look Resilient to Virus

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The bull market turned 11 yesterday. The collapse of Lehman Brothers in September 2008 wreaked havoc on Wall Street. And on Mar 9, 2009, the S&P 500 bottomed out to start an astral rally. But all this is history today as the S&P 500 is now trading at 2,746.56 (as of Mar 9, 2020). The Fed’s quantitative easing and rock-bottom interest rate policy in order to boost a struggling economy took Wall Street to this high.

However, it seems that the bull market won’t last long as the coronavirus outbreak appears to be as big a threat as the 2008 financial crisis. The S&P 500 is now down 19.1% from its all-time high of 3393.52. If the decline continues, with the S&P 500 20% below its record high, the bull market that began in March 2009 will officially be over.

On Mar 9, 2020, the blue-chip Dow Jones suffered its largest points single-day drop ever (down 7.8%), with the S&P 500 (down 7.6%) and the Nasdaq (down 7.8%) seeing one of the worst days since the financial crisis. Crude oil prices plunged 25% after the world's key producing countries failed to cut an output cut deal. All these sparked severe global growth crisis, dealing a big blow to the market.

Let’s take a look at the sector ETF winners of the past decade and if these can continue to soar irrespective of the coronavirus attack.

Sector ETF Winners

Technology

The emergence of cutting-edge technology, such as cloud computing, big data, IoT, virtual reality devices and AI as well as strong corporate earnings, is driving the sector.

Though the tech space is also in the red amid the current virus-induced selloff, it should be resilient to steep selloffs as the space involves less human contact. Tech companies, especially those involved in Internet and cloud-related businesses, should stay afloat. If the virus spreads, “cloud software is going to become essential, with an increasing amount of people working from home” (read: Amid the Tech Slump, Internet ETFs Most Resilient to Virus).

First Trust Dow Jones Internet ETF (FDN - Free Report) – Up about 888.9% in the past 11 years

First Trust NASDAQ-100-Tech Sector ETF (QTEC - Free Report) – Up about 789.4%

Biotech

Successful clinical trials for new drugs, a flurry of FDA approvals, higher demand from emerging markets, and ramped-up merger and acquisition hold the key to the sector’s success in recent times. The emergence of the novel coronavirus has enhanced the sector’s appeal even more as its players are now busy formulating a breakthrough vaccine for it (read: Can Biotech ETFs Gain on Mixed Q4 Earnings Results?).

First Trust NYSE Arca Biotech ETF (FBT - Free Report) – Up about 717.6%

SPDR S&P Biotech ETF (XBI - Free Report) – Up about 485.2%

Consumer Discretionary

After years of stagnation, the U.S. job market has gathered steam, giving many lower income consumers some extra cash. The U.S. economy added 273,000 jobs in February 2020, the maximum since May 2018, compared to an upwardly revised 273 thousand in January and market expectations of 175,000. Low fuel prices over the last few years continued to fatten consumers’ wallets.

Vanguard Consumer Discretionary ETF (VCR - Free Report) – Up about 666.7%

Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) – Up about 684.7%

Healthcare

This sector is a bit defensive in nature. An aging population, growing demand in emerging markets and product launches are working in favor of the sector. Also, the coronavirus scare should generate higher business for the space.

First Trust Health Care AlphaDEX ETF (FXH - Free Report) – Up about 527.1%

Invesco Dynamic Pharmaceuticals ETF (PJP - Free Report) – Up about 422.4%

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