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Tech Rally Helps Nasdaq Turn Positive for 2020: ETFs to Play

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The Nasdaq Composite index erased most of its coronavirus-induced losses as it ended Thursday’s trading session in the positive territory for the first time in two months. Notably, the Nasdaq had slid more than 32% from its all-time high to its Mar-23 low. The tech-heavy index advanced 1.4% in yesterday’s trading session, largely backed by top tech stocks like Apple (AAPL - Free Report) , which was up 1%, Facebook’s (FB - Free Report) increase of 1.3% as well as Amazon (AMZN - Free Report) and Alphabet’s (GOOGL - Free Report) gains of at least 0.70%. Recouping this year’s losses, Nasdaq is up nearly 0.1%.

Investors’ optimism surrounding the reopening of the U.S. economy in phases might be supporting the index. Moreover, the major technology companies’ resilience to the coronavirus crisis must have supported the tech-heavy index. Major technology stocks like Facebook, Amazon, Apple, Netflix (NFLX - Free Report) and Alphabet are all positive for 2020 and have gained at least 15.8% this quarter. Moreover, Microsoft (MSFT - Free Report) has supported the Nasdaq by gaining more than 16% in the ongoing year.

In this regard, Ed Yardeni, president and chief investment strategist at Yardeni Research, has said that “while we have all become even more dependent on the products and services provided by the FAANGMs during the Great Virus Crisis, they might have become more immune to government regulation. They have great balance sheets and generate lots of cash flow,” according to a CNBC article.

The pandemic has resulted in some changes in the lifestyle and preferences of Americans. Most of the surveys have found that people are more interested in online shopping rather than visiting a brick-and-mortar store for their purchases of essential food items and supplies now. Even as the U.S. economy starts to reopen in phases and social distancing restrictions are being eased, people will try to minimize human-to-human contact.

In the current scenario, the rising work-from-home and online shopping trends, increasing digital payments, growing video streaming and soaring video game sales are slowly becoming the “new normal.” With the new trends making way, these major technology stocks are expected to continue to gain on rising demand for their products and services.

ETFs to Gain

Investors seeking to ride the Nasdaq bulls could consider the following ETFs. These funds might see massive trading volumes in the days ahead if the afore-mentioned trends stay.

Invesco QQQ (QQQ - Free Report) — up 1.3% on Thursday

This ETF provides exposure to 103 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq-100 Index. QQQ is one of the largest and most popular ETFs in the large-cap space, with AUM of $101.33 billion and average daily volume of around 45.8 million shares. It charges investors 20 bps in annual fees. The fund sports a Zacks ETF Rank #1 (Strong Buy), with a Medium-risk outlook (read: ETF Asset Report of Coronavirus-Inflicted April).

First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW - Free Report) — up 1.3%

Holding 104 stocks, this fund provides equal exposure to stocks of the Nasdaq-100 Index. It has amassed $734.2 million in its asset base, while it trades in lower volumes of nearly 102,000 shares a day on average. It charges 60 bps in annual fees. QQEW carries a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook.

Fidelity Nasdaq Composite Index Tracking Stock (ONEQ - Free Report) — up 1.7%

This ETF tracks the Nasdaq Composite Index, holding a broad basket of 990 stocks. It has AUM of $2.40 billion and average daily volume of around 68,000 shares. The expense ratio comes is 0.21%. The product carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook.

ProShares Ultra QQQ (QLD - Free Report) — up 2.7%

Investors seeking to make big gains in a short span can bet on QLD. It provides twice the return of the NASDAQ-100 Index’s daily performance and sees nearly 1.7 million shares trading in average daily volume. The fund has AUM of $2.15 billion and charges 95 bps in fees and expenses.

ProShares UltraPro QQQ (TQQQ - Free Report) — up 3.9%

For a more bullish approach, TQQQ could be an excellent choice. It also tracks the NASDAQ-100 Index but offers thrice the returns of the daily performance, with the same expense ratio of QLD. The fund has managed AUM of $5.42 billion and sees nearly 35 million shares trading in average daily volume (read: A Quick Guide to 10 Most Popular Leveraged ETFs).

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