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ETFs to Ride the Current Market Rally Post Fed's Meeting

The Wall Street rally is expected to continue on optimism surrounding the Federal Reserve's decision, accelerated coronavirus vaccine rollout and U.S....

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This story originally appeared on Zacks

Investors have been cheering the Federal Reserve’s decision of not making any immediate move to taper the bond purchasing program and keeping the benchmark interest rates unchanged. The market rally following the Fed’s announcements and easing of China’s property crisis concerns have resulted in the major market indices moving back into the positive territory for the week. The Dow Jones Industrial Average and the S&P 500 have risen 0.5% and 0.3%, respectively, for the week. The Nasdaq Composite has also gained 0.06% for the same period.

- Zacks

In this regard, Charlie Ripley, senior investment strategist for Allianz Investment Management, has said that “Uncertainty had been building around the path of the economy and the Fed instilled some confidence into markets yesterday. In addition, other risks that have been weighing on investor sentiment like the debt ceiling and risks associated to China’s real estate market appear to be fading, which have dialed up investors’ appetite for risk,” per a CNBC article.

Going on, there are certain other positive developments that can help stimulate a market rally. The FDA has approved emergency use of a booster dose of the Pfizer Inc. (PFE) and BioNTech SE (BNTX) COVID-19 vaccine. The booster shot has been authorized for the population aged 65 years and above. The booster dose has also been approved to administer to individuals between 18 and 64 years of age and at high risk of severe COVID-19.

The FDA has also authorized the booster shot for people in the 18-64 years of age group whose frequent institutional or occupational exposure to SARS-CoV-2 expose them to the high risk of severe complications of COVID-19.

President Joe Biden has also outlined a very effective plan to accelerate the vaccination rate and control the coronavirus outbreak. He has made it mandatory for the federal employees to get the COVID-19 vaccination, per a CNBC article. The Biden government will also issue guidelines to the Labor Department for imposing vaccine mandates for employers with more than 100 employees or run weekly tests.

The latest retail sales data has pleasantly surprised investors. The metric inched up 0.7% sequentially in August 2021 against the market expectations of a 0.8% decline, per a CNBC article. Online retail sales rose 5.3% last month after dipping 4.6% in July, per a Reuters article. There was an increase in the sales at clothing stores as well as for the building material and furniture in the previous month. Encouragingly, the core retail sales rebounded 2.5% in August from a downward revision of 1.9% in July, according to the Reuters article. The metric highlights the spending component of GDP.

The U.S. consumer sentiment also marginally improved despite the heightening concerns about the surging coronavirus cases and the rising inflationary levels. The University of Michigan’s preliminary consumer sentiment has inched up to 71 in September from 70.3 last month, per a BloombergQuint article.

The latest ISM Manufacturing Purchasing Managers' Index (PMI) data for the United States paints a rosy picture for the industrial sector. The metric rose to 59.9 in August from 59.5 in July and surpassed forecasts of 58.6, per a Reuters article. Any reading above 50% indicates an expansion in U.S. manufacturing activities. Notably, the manufacturing sector, which makes up 11.9% of the U.S. economy, saw the reading expanding for the 15th consecutive month.

ETFs to Ride the Wave

Investors who seek to capitalize on the strong trends should consider the following ETFs:

SPDR S&P 500 ETF Trust SPY

This fund seeks to provide investment results that before expenses correspond generally to the price and the yield performance of the S&P 500 Index. Its AUM is $395.46 billion and the total expense ratio, 0.09% (read: Technology and Volatility: 2 ETFs to Watch for Outsized Volume).

iShares Core S&P 500 ETF IVV

The fund seeks to track the investment results of an index composed of large-capitalization U.S. equities. Its AUM is $295.42 billion and the total expense ratio, 0.03%.

Vanguard S&P 500 ETF VOO

The fund seeks to track the performance of the S&P 500 Index. Its AUM is $250.43 billion and the total expense ratio, 0.03% (read: Tax Hike in the Cards? ETFs in Focus).

SPDR Dow Jones Industrial Average ETF Trust DIA

The fund seeks to provide investment results that before expenses correspond generally to the price and the yield performance of the Dow Jones Industrial Average. Its AUM is $28.87 billion and the total expense ratio, 0.16% (read: Tesla Beats in Q2 as Indexes Set New Closing Highs).

iShares Dow Jones U.S. ETF IYY

The fund seeks to track the investment results of a broad-based index composed of U.S. equities. Its AUM is $1.71 billion and the total expense ratio, 0.20% (read: Dow Jones Sets New Record: More Upside Ahead for ETFs?).



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SPDR S&P 500 ETF (SPY): ETF Research Reports

 

SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports

 

Vanguard S&P 500 ETF (VOO): ETF Research Reports

 

iShares Dow Jones U.S. ETF (IYY): ETF Research Reports

 

iShares Core S&P 500 ETF (IVV): ETF Research Reports

 

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Zacks Investment Research