雅虎香港財經 Consumer Optimism at 3-Year High: 5 ETF Picks
U.S. consumers are now feeling more optimistic about the stock market and slowing inflation, according to the latest survey released by the Federal Reserve Bank of New York. Consumers are currently the most bullish on the outlook for stocks since May 2021.
Given this, we have highlighted five ETFs having a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy) that could be compelling ways to tap this bullish view. These are VanEck Vectors Retail ETF RTH, VanEck Vectors Semiconductor ETF SMH, Invesco AI and Next Gen Software ETF IGPT, iShares Core S&P 500 ETF IVV and Invesco QQQ Trust QQQ.
Bullish View
Household expectations for US stock prices improved to a three-year high. The data showing the probability that stocks will be higher in the next 12 months rose to 40.5% in May, up from 38.7% in April. Consumers' expectations for inflation over the next year fell from 3.3% in April to 3.2% in May. Broadly, the New York Fed found households were feeling better about their financial situations as more respondents reported being "better off than a year ago" while fewer respondents noted they were "worse off."
The upbeat sentiment can be attributed to the solid Wall Street rally, with the S&P 500 and the Nasdaq Composite Index hitting a series of record highs. Solid corporate earnings, Fed rate cut bets and booming AI have been driving the rally. Notably, a solid positive corporate earnings outlook has prompted several analysts to upgrade their year-end S&P 500 target price. The Street-high year-end target price for the S&P 500 has moved up to 5,600 from 5,200 at the start of the year (read: 5 Top Best Performing S&P 500 ETF Stocks of May).
Further, the expansion of AI applications holds the promise of ushering in fresh opportunities for growth in the tech sector and beyond. According to a new report by Grand View Research, the global artificial intelligence market is expected to witness a CAGR (2024-2030) of 36.6% to reach $811.75 billion by 2030.
Any Cause of Worry?
The recent economic data painted a mixed picture of the economy. U.S. business activity growth accelerated sharply to its fastest pace in more than two years in May after two months of slower growth, led by an upturn in the service sector. Consumer confidence, as indicated by the Conference Board’s gauge of sentiment, increased in May after three months of decline. The latest job data also signaled the strength of the U.S. economy, dialing back expectations of a rate cut. U.S. job growth jumped in May and wage growth accelerated.
However, U.S. manufacturing activity slowed for the second straight month in May, and U.S. construction spending fell unexpectedly for the second consecutive month in April on declines in non-residential activity. The latest PCE inflation data revealed that U.S. inflation had stabilized in April, suggesting that the U.S. central bank’s interest rate cut plans later this year remained intact (read: Sector ETFs to Profit as Rate Cut Bets Rise).
We have highlighted the abovementioned ETFs in detail below:
VanEck Vectors Retail ETF (RTH)
VanEck Vectors Retail ETF provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. VanEck Vectors Retail ETF has amassed $208.1 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 5,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #2 with a Medium risk outlook.
VanEck Vectors Semiconductor ETF (SMH)
VanEck Vectors Semiconductor ETF offers exposure to companies involved in semiconductor production and equipment. It follows the MVIS US Listed Semiconductor 25 Index and holds 26 stocks in its basket. VanEck Vectors Semiconductor ETF has managed assets worth $21.8 billion and charges 35 bps in annual fees and expenses. SMH trades in average daily volume of 6.9 million shares and has a Zacks ETF Rank #1 with a High risk outlook.
Invesco AI and Next Gen Software ETF (IGPT)
Invesco AI and Next Gen Software ETF offers exposure to companies with significant exposure to technologies or products that contribute to future software development through direct revenue. It holds 98 stocks in its basket and charges 60 bps in fees per year from investors. Invesco AI and Next Gen Software ETF has amassed $342.6 million in its asset base and trades in volume of 61,000 shares a day on average. It has a Zacks ETF Rank #1 (read: Can NVIDIA's AI Chip Dominance Continue?).
iShares Core S&P 500 ETF (IVV)
iShares Core S&P 500 ETF tracks the S&P 500 Index and holds 503 stocks in its basket. It is heavy on the information technology sector, while financials and healthcare round off its next two spots with a double-digit allocation each. iShares Core S&P 500 ETF charges investors 3 bps in annual fees and trades in an average daily volume of 4 million. It has an AUM of $456.7 billion and a Zacks ETF Rank #1 with a Medium risk outlook.
Invesco QQQ Trust (QQQ)
Invesco QQQ Trust provides exposure to the 101 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. It is one of the largest and most popular ETFs in the large-cap space, with an AUM of $275 billion and an average daily volume of 37 million shares. QQQ charges investors 20 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Invesco QQQ (QQQ): ETF Research Reports
VanEck Retail ETF (RTH): ETF Research Reports
VanEck Semiconductor ETF (SMH): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
Invesco AI and Next Gen Software ETF (IGPT): ETF Research Reports
