Investors remained optimistic in October, taking advantage of the good third quarter earnings season. The stock market has recovered impressively despite concerns about rising materials prices due to supply chain disruptions, COVID-19 uncertainty and Federal Reserve concerns. In fact, the top three averages closed at a record high for the third consecutive trading session on November 2.
The central bank is expected to cancel month-end bond purchases by cutting $ 10 billion from $ 80 billion per month in treasury bills and $ 5 billion from $ 40 billion per month in asset-backed securities. mortgages (according to a CNBC article). If all goes well, the Federal Reserve expects to complete its cut by mid-2022.
Market experts attribute the formidable rally to the impressive earnings season. Notably, 83% of S&P 500 companies that released earnings results exceeded analysts’ earnings estimates as of Nov. 2, according to FactSet data (according to a CNBC article). The earnings results also erased investor worries about growing supply chain disruptions, gradually eroding corporate profit margins.
Persistent optimism in the market keeps investors optimistic about the year-end recovery. In this regard, Keith Lerner, Co-Director of Investments at Truist, said that âthe primary market trend appears to be higher. In the eight periods since 1950 that stocks rose more than 20% through October, as it did this year, the S&P 500 made additional year-end gains 100% of the time with a average gain of 6.2%, âas reported in a CNBC article.
Looking at the October rally, here we highlight some of the top ranked ETFs that have outperformed the market over the past month:
Invesco DWA Industrials Momentum ETF PRN – up 16.3% over the past month
The industrial sector has caught the attention of investors as the gradual reopening of the US and global economies highlights more promising prospects. Consumer confidence in the United States increased in October mainly on the back of easing concerns about the Delta variant, improving labor market conditions, the rebound of the US economy after the crisis caused by the pandemic and the acceleration of the deployment of the coronavirus vaccine.
The fund seeks to deliver investment results which, before expenses, match the performance of the Dorsey Wright Industrials Technical Leaders Index. Its expenditure rate is 0.60%. The fund has a Zacks ETF # 2 (Buy) ranking with a medium risk outlook (read: Beyond clean energy, 5 sector ETFs hitting record highs).
ETF SPDR S&P Semiconductors XSD – up 15.4%
The semiconductor industry is gaining more and more investor attention with its promising prospects. Coronavirus-induced work-from-home and web-learning trends have driven demand for chips from PC makers and data center operators. The growing importance of hybrid cloud among businesses is attracting investment from large public cloud providers, including Amazon Web Services, Microsoft Azure, Google Cloud, International Business Machines, and Oracle. Data center chip vendors are likely to benefit from this trend.
This ETF tracks the S&P Semiconductor Select Industry Index. It charges 35 basis points (bps) in fees per year to investors. It displays a Zacks ETF No.1 (strong buy) ranking, with a high risk outlook (read: 5 top ranked chip ETFs to win on the ongoing supply crisis).
The selective consumer discretionary sector SPDR fund XLY – up 12.5%
Consumers appear to be eager to purchase durable homes, motor vehicles and household capital goods. In fact, the buying attitude for vehicles and homes is booming. The survey also showed that the proportion of the population planning to go on vacation reached its highest level since February 2020, as mentioned in a Reuters article.
The Conference Board’s consumer confidence index stood at 113.8 against 109.8 in September. The metric finally broke the streak of three straight monthly declines. The October reading also broke the metric’s consensus estimate, at 108.3, according to a Reuters poll. The measurement continues to be below the pre-pandemic level of 132.6 in February 2020.
It is the largest and most popular product in the consumer discretionary space. It tracks the Consumer Discretionary Select Sector Index. The fund charges 12 basis points in fees per year and is ranked 2nd among Zacks ETFs, with a medium risk outlook (read: ETFs profiting from Tesla’s push).
Invesco DWA Momentum Technology ETF PTF – up 12.4%
Technology is playing a huge role in the uncertainty surrounding COVID-19 by helping people maintain safe distance standards. As the US economy reopens, a growing number of US shoppers are visiting stores for retail therapy. However, with the increase in the number of cases of Delta variants, buyers are expected to resort to online shopping again.
Some other ânormal newsâ trends have also emerged amid the health crisis, such as working from home, increasing digital payments, the growth of video streaming, and surging video game sales. The pandemic is also a boon for the e-commerce industry, as people continue to stay indoors and buy all essentials online, especially food items.
The fund seeks to deliver investment results which, before fees, match the performance of the Dorsey Wright Technology Technical Leaders Index. Its expense ratio is 0.60% and carries a Zacks ETF Rank # 2, with a high risk outlook
First Trust Nasdaq Transport ETF FTXR – up 10.9%
This holiday season appears to be a relatively busy time for retailers. In addition, the growing inclination towards e-commerce has made it possible to expand the reach of retail players. Therefore, there is likely to be a large increase in demand for freight services to deliver the products ordered online.
This ETF tracks the Nasdaq US Smart Transportation Index. It charges 60 basis points of fees per year to investors. It displays a Zacks ETF Rank # 2.
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Invesco DWA Industrials Momentum ETFs (PRN): ETF Research Reports
Invesco DWA Technology Momentum ETFs (PTF): ETF Research Reports
Selected Consumer Discretionary Sector SPDR ETF (XLY): ETF Research Reports
SPDR S&P Semiconductor ETF (XSD): ETF Research Reports
First Trust NASDAQ Transportation ETFs (FTXR): ETF Research Reports
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