Enjoy the optimism of the US economy reopening with these ETFs
The Wall Street rally in March indicates the increasing rotation towards stocks that can benefit from the reopening of the US economy. Indeed, the Dow Jones Industrial Average, which seems to benefit the most from the euphoria of the reopening, is up 2.8% in March while the S&P 500 index is up 0.3%. Meanwhile, the Nasdaq Composite is down 4.4% as it appears to be falling into correction territory.
Even on March 8, it was observed that consumer discretionary stocks like Disney DIS and Target TGT were up 6% and 2.5%, respectively. Shares of airlines like American Airlines AAL and United Airlines also climbed around 5% and 7%, respectively. Meanwhile, stocks like Apple AAPL, Alphabet (GOOGL) and Netflix NFLX which have largely benefited from “normal new trends” like working from home, the increase in online streaming and online shopping fell by more than 4% the same day. Additionally, Stay Home Economy beneficiaries like Zoom Video and Peloton have lost 24% and 30% respectively over the past month.
Optimism surrounding the reopening of the U.S. economy was heightened when the Centers for Disease Control and Prevention informed that people who have completed the coronavirus vaccination process can safely hold indoor meetings without being forced. to wear masks, as mentioned in a CNBC article. Additionally, according to the same article, California health officials gave a green signal to Disney’s Disneyland and other theme parks as well as outdoor stadiums and ball parks to reopen with limited capacity on April 1.
Notably, the Senate also approved President Joe Biden’s $ 1.9 trillion coronavirus relief program, also known as the American Rescue Plan Act of 2021. The Senate had to change certain provisions of the plan for this. approval. Now the bill must be sent back to the House which adopted the previous version of the proposal last week. Notably, the legislation is expected to reach Biden’s table for signature before unemployment assistance programs expire on March 14.
House Democrats’ proposed coronavirus relief bill provides direct support for small businesses, $ 1,400 direct checks to qualifying Americans, increased child tax credit for one year, direct funding to state and local governments as well as funding for schools and increased funds for the distribution and testing of coronavirus vaccines, according to a CNBC article. However, stimulus check income thresholds are now changed while weekly unemployment benefits are reduced from $ 400 to $ 300 by the Senate and will now end in September, as noted in the aforementioned report.
ETFs to ride on the optimism of the reopening
Against this background, let’s take a look at the following ETFs that are well positioned to win as the reopening of the US economy gathers pace:
The SPDR Energy Select Sector fund XLE
The energy sector has bled profusely due to the historically low levels of oil prices induced by the pandemic, thanks to the double blow of weak demand and oversupply. Notably, an increase in coronavirus cases has also weighed on demand for oil. However, the reduction in oil supply, increased fiscal stimulus, rising industrial production and a weak dollar while the Fed has remained super accommodating are helping to support oil prices and will continue to favor the economy. sector in the context of the reopening of the US economic scenario. XLE seeks to provide investment results which, before fees, generally correspond to the price and performance of the Energy Select Sector Index. The fund charges 0.12% as an expense ratio.
United States Petroleum Fund OSU
The investment objective of the United States Oil Fund is that the daily percentage changes in the net asset value (NAV) of its shares reflect the daily percentage changes in the spot price of light crude oil. non-corrosive delivered to Cushing. , OK, as measured by the daily changes in the benchmark oil futures contract. It has an expense ratio of 0.73%.
Fidelity MSCI Consumer Discretionary Index ETF FDIS
The increase in direct payments to Americans is certainly a beacon of hope for players in the consumer discretionary sector, which attracts a significant portion of consumer spending. The fund intends to provide investment results which, before fees, generally match the price and return performance of the MSCI USA IMI Consumer Discretionary Index. It charges investors 8 basis points of annual fees as stated in the prospectus (read: Will ETFs recover as US consumer confidence improves in February?).
Vanguard Industrial ETFs SCREW
The industrial sector, which has faced disruptions in global supply chains and plant closures, is expected to rebound from the coronavirus crisis. The reopening of the US economy, the introduction of a coronavirus vaccine and the addition of stimulus measures are expected to boost demand and economic activity in the sector. The fund replicates the MSCI US Investable Market Industrials 25/50 index and an expense ratio of 0.10%.
Vanguard S&P Small Cap 600 ETF VIOO
Small-cap stocks, as the Russell 2000 Index indicates, have outperformed the overall market and hit new all-time highs. This rise is largely driven by small cap companies which are closely tied to the US economy and therefore well positioned to outperform when the economy improves. VIOO seeks to track the performance of the S&P Small-Cap 600 Index. It has an expense ratio of 0.10% (read: Take a look at these 5 ETFs for surfing bull markets).
US Global Jets ETFs JETS
By studying the stressed balance sheets of carriers, it will be safe to say that the space is likely to receive enormous support from the reopening of the US economy. JETS provides investors with access to the global airline industry, including airline operators and manufacturers worldwide. The fund has an expense ratio of 0.60% (read: Sector ETFs To Profit / Lose As Oil May Reach $ 70 Soon).
The ETFMG Travel Tech ETF A WAY
The travel industry will receive the much needed boost from the reopening of the US economy, accelerated initiatives to roll out coronavirus vaccines and the introduction of another round of fiscal stimulus. This fund is the first ETF to focus on technology-driven global travel companies. It charges a 0.75% expense ratio (read: 5 best performing ETFs of February).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.