Bet on These 5 ETFs to Combat the Current Market Tantrums
Zacks Investment Research | Feb 06, 2022 09:12PM ET
Wall Street continues to see extreme volatility in market movements. After some relief rally, all three major indexes again ended the trading session in red. The Dow Jones Industrial Average lost about 1.5% on Feb 3. Moreover, the S&P 500 and the Nasdaq Composite indices were down 2.4% and 3.7%, respectively, on the same day. In fact, the tech-heavy index witnessed its worst daily performance since September 2020 (per a CNBC article).
The pessimism in the market was largely due to disappointing fourth-quarter 2021 results reported by social media giant Meta Platforms (FB) after the closing bell on Feb 2. The company lost daily users in a quarter for the first time since it went public in 2012 and provided a weak revenue guidance for the ongoing quarter. Meta Platforms missed on earnings estimates though it beat on revenues.
In this regard, Goldman Sachs’ Chris Hussey commented that “The sharp drop in FB market cap today and the accompanying drag on the S&P500 index is ... a stark reminder of the high concentration of mega-cap Tech stocks in the S&P 500 — and the vulnerabilities that such concentration brings,” as mentioned in a CNBC article.
Several other concerns like the fourth-quarter earnings season, mixed economic data releases and the chances of fed rate hikes can keep clouding market sentiments. Post the Federal Reserve Open Market Committee’s meeting, Chairman Jerome Powell indicated that the first rate hike since 2018 could be seen as early as March 2022. The Federal Reserve has already started tapering bond purchases, which it expects to complete by this March. However, the magnitude and the month of the interest rate hike have not been clearly stated yet.
Thus, seeing the current market gyrations and the investment environment, here are some ETF choices for investors:
SPDR S&P Bank ETF Quality ETFs Appear Attractive as Fed Rate Hike Nears ).
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