ETF Laggards are Emerging Leaders: Here's Why
Zacks Investment Research | Aug 14, 2020 01:00AM ET
U.S. stocks have been steady, of late, with investors shifting focus to the reopening of economy and an improvement in virus cases.Recent data points show that the outbreak is gradually coming under control, even in the hardest-hit states.
quoted on Yahoo Finance .
The U.S. weekly jobless claims dropped to 963,000, marking the first time below 1 million since mid-March. The data also a 1.6-million increase .Average hourly earnings for all employees on private non-farm payrolls went up 7 cents to $29.39.
The U.S. ISM Manufacturing PMI came in at 54.2 for July 2020, up from the 52.6 recorded in the previous month and surpassing market expectations of 53.6. That is the highest reading since March 2019, as manufacturing activity is recovering after the disturbance caused by the pandemic. U.S. manufacturers expanded in July for the third successive month.
In addition, developments in the treatment and vaccine phases have been encouraging. President Trump announced that the U.S. government will buy 100 million doses of its coronavirus vaccine from Moderna (NASDAQ:MRNA). Moreover, vaccine candidates from Pfizer (NYSE:PFE), Johnson & Johnson (NYSE:JNJ) and Astrazeneca (LON:AZN) are showing hopes.
Though complete normalcy is not possible right now, investors look hopeful about market recovery. Some laggards amid the peak of the pandemic are emerging as leaders. Below we highlight some of the ETFs. All these ETFs beat the S&P 500 in the past month (up 6.2%).
U.S. Global Jets ETF JETS – Up 9.1% Past Month
Airline stocks bounced back strongly this week on a rebound in travel demand. This is especially true as the number of people going through airport security screening checkpoints hit Airline ETF Takes Off: Will The Surge Continue? ).
VanEck Vectors Gaming ETF BJK – Up 14.1% Past Month
The MVIS Global Gaming Index tracks the overall performance of companies involved in casinos and casino hotels, sports betting, lottery services, gaming services, gaming technology and gaming equipment. One of the components of the fund — MGM Resorts (NYSE:MGM) — jumped after Barry Diller’s IAC/InterActiveCorp. (NASDAQ:IAC) bought a 12% equity stake in the casino company. The bet was mainly to cash in on the recent rise in online gambling.
First Trust NASDAQ Global Auto ETF CARZ – Up 10.9% Past Month
The fund is a clear beneficiary of the Tesla (NASDAQ:TSLA) rally. The electric carmaker’s shares soared after it announced a 5-for-1 stock split. Moreover, U.S. sales of new light vehicles in July the electric carmaker raised optimism by announcing a 5-for-1 stock split ).
SPDR SP Bank ETF KBE – Up 16.2% Past Month
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Talks of reopening the economy and government stimulus have reduced the delinquency risks for pint-sized stocks, which in turn favored banking stocks as this enhances banks’ credit quality. If markets remain steady ahead, bank stocks might stage a rebound on higher yields. However, it is still too early to be fully bullish on bank stocks as some banks are “still seeing a flurry of defaults ”, per a CNBC article.
SPDR SP Retail ETF XRT – Up 17.9% Past Month
The consumer sector looks to be on the mend. Visa (NYSE:V)'s total U.S. payment volume Can the Best Sector & Its ETFs of July Thrive in August Too? ).
Industrial Select Sector SPDR ETF (NYSE:XLI) XLI – Up 15.2% Past Month
The sector has suffered massively amid pandemic. With millions of Americans still unemployed, creation of blue-collar jobs would be of high priority. The latest recruitment pattern in the sector also calls for optimism.
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