The first quarter of 2020 was the worst one for Wall Street since the fourth quarter of 2008, for European stocks since 2002 and for emerging markets since 2008 due to the coronavirus outbreak. The S&P 500 saw its worst first quarter ever (down 20%) (read:
Top ETF Stories of First Quarter).
Wall Street fell into bear market in mid-March only to spring higher from late March and score the 82-year best April. Gigantic Fed and government stimulus facilitated this rally. The winning momentum is being carried into May thanks to the reopening of economies.
Moreover, China – which enacted lockdown pretty earlier than the rest of world – reported a 3.5% year-over-year rise in exports in April, crushing analysts’ expectations of a decline in 15.7%. This flared optimism on the same level of global recovery in the coming days.
Overall, the S&P 500 is down 10.8% this year, after a massive recovery in April. Against this backdrop, we highlight a few ETF areas that have beaten the S&P 500 this year.
Healthcare and biotech stocks and ETFs soared higher amid the ongoing medical emergency. Biotech stocks, in fact, had their best monthly gain in two decades in April. Large pharma and biotech companies are working on medicines, vaccines and testing kits. Most recently,
Gilead ( GILD Quick Quote GILD - Free Report) indicated that the trial for coronavirus treatment Remdesivir has met its initial goal. And Remdesivir received the FDA nod for emergency use for coronavirus as an experimental drug. Moderna Inc. ( MRNA Quick Quote MRNA - Free Report) , which is developing experimental vaccines, said it has entered into an agreement to manufacture a billion doses a year. This optimism should keep Wall Street charged up. VanEck Vectors Biotech ETF ( BBH Quick Quote BBH - Free Report) — Up 6.1% iShares Nasdaq Biotechnology ETF ( IBB Quick Quote IBB - Free Report) — Up 3.4% Technology
Tech stocks have been investors’ darlings this year despite the coronavirus outbreak. In fact, social distancing norms enacted globally to mitigate the spread of the virus compelled people to stay at home, binge online and work as well as learn from home. This new lifestyle has boosted various corners of the technology sector, ranging from enterprise cloud computing, cyber security, remote communications, video gaming and e-commerce to online payments.
First Trust Dow Jones Internet ETF ( FDN Quick Quote FDN - Free Report) — Up 4.5% iShares Expanded TechSoftware Sector ETF ( IGV Quick Quote IGV - Free Report) — Up 2.6% SPDR NYSE Technology ETF XNTK — Up 1.8% Large-Cap Growth
April’s torrid stock market rally was mainly spurred by large-cap growth stocks. Amid pandemic, small-cap stocks were initially beaten-down as these lack financial stability lesser than their larger peers.
iShares Morningstar LargeCap Growth ETF ( JKE Quick Quote JKE - Free Report) — Up 0.3% Vanguard Mega Cap Growth ETF MGK — Down 1.2% China
Despite being the perpetrator of the pandemic, China stocks beat Wall Street surprisingly in Q1, having lost only 11% in dollar terms. Note that the epidemic began in China in January leading to lockdowns in cities. Still, several China stocks and ETFs lost very little in the quarter. Compelling valuations, the signing of the phase-one trade deal and policy easing probably helped China ETFs hold up well this year. Latest recovery is another positive (read: These China ETFs Hardly Felt Any Coronavirus Pain in Q1).
VanEck Vectors ChinaAMC SMEChiNext ETF ( CNXT Quick Quote CNXT - Free Report) — Down 0.13% KraneShares CSI China Internet ETF ( KWEB Quick Quote KWEB - Free Report) — Down 5.42% Xtrackers MSCI China A Inclusion Equity ETF ASHX — Down 5.43% Retail
Retail — predominantly dependent on consumer discretionary activity — had a painful stretch in the peak of the pandemic due to store closures. However, before the virus outbreak, the sector was steady.
VanEck Vectors Retail ETF ( RTH Quick Quote RTH - Free Report) — Down 0.13% Clean Energy
Upbeat earnings and
Tesla’s TSLA optimistic solar plan boosted solar ETF investing in early 2020. Investors should note that the United States is putting focus on clean electricity generation. China is a major player building a green environment. The European Union’s (EU) 28 member states’ efforts on this ground is also commendable. All these explain the rally in clean energy ETFs before the virus outbreak (read: Bet on "American Magic" With 4 Solid Small-Cap Sector ETFs). Invesco Solar ETF ( TAN Quick Quote TAN - Free Report) — Down 5.0% First Trust NASDAQ Clean Edge Green Energy ETF ( QCLN Quick Quote QCLN - Free Report) — Down 5.1%
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