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1.

ETF Spotlight: Invesco QQQM Outshines QQQ

2024-04-26 12:00:00 by Jeff Benjamin from etf.com

The $22.2 billion Invesco Nasdaq 100 ETF (QQQM) stood out as one of the bright spots in the Invesco Ltd. first-quarter earnings report this week, which highlighted the 4-year-old fund for its $2.8 billion worth of net inflows.

But let’s not forget about the Invesco QQQ Trust (QQQ), the $245 billion flagship that took in $9.1 billion during the quarter, or more than three times the inflows of QQQM.

It comes down to revenue generation and QQQ doesn’t generate a dime for Invesco.

The distinction between the two ETFs is both interesting and subtle and underscores the hit Invesco suffered in the first quarter when the realities of lower management fees contributed to a decline in quarterly profits at the $1.6 trillion Atlanta-based asset manager.

That brings us to the anomaly of QQQ, which is more than 10 times the size of QQQM and is 33% more expensive at 20 basis points yet contributes nothing to Invesco’s bottom line.

QQQ, QQQM: Mag 7 Exposure

Invesco executives and representatives are keen to boast of the marketing benefits of a high-profile ETF like QQQ, which, like QQQM, offers easy exposure to the popular Magnificent Seven stocks. But the unit investment trust structure of QQQ, dating to its launch in 1999, means the expense ratio is essentially split between the provider of the underlying index, Nasdaq, and the trustee of the ETF, Bank of New York Mellon.

Doubling down on the positive spin of a giant ETF that isn’t generating any profits for the issuer, a company spokesperson described QQQ as among the most liquid equity ETFs in the world, which is used as a trading vehicle for the largest institutions.

A company spokesperson described QQQ, which is a trading vehicle for major financial institutions, as among the world's most liquid equity ETFs.

For the more fee conscious, longer-term investor, the edge goes to QQQM, which gained 36.02% over the past 12 months, compared to a 35.89% gain for QQQ over the same period.

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2.

Stocks are sending mixed signals, but investors shouldn't 'lose faith now': Morning Brief

2024-04-25 10:00:19 by Jared Blikre from Yahoo Finance

This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:

• The chart of the day

• What we're watching

• What we're reading

• Economic data releases and earnings

Disappointing Boeing (BA) earnings drove the Dow to a small loss Wednesday, while a surprisingly positive reaction to Tesla (TSLA) results led that stock to its best day in two years (up 12%), helping the S&P 500 and Nasdaq Composite close in the green.

Taking stock of equities as we head toward the end of April, investors are facing mixed messages from Wall Street. 

After a year that defied recession expectations, the first quarter of 2024 built on last year's strength. 

This year, the S&P 500 turned in the best first quarter return since 2019, rising 10%. But the stock sell-off this month has made April the worst month since last September. 

Ryan Detrick, chief market strategist at Carson Group, created a seasonality map from all the election years going back to 1950 that were sitting on gains of at least 5% by the end of March: 1956, 1964, 1972, 1976, and 2012.

At first glance, 2024 is marching along to a similar playbook. And, if anything, the bout of April weakness is overdone.

There's another reason to think that any short-term rallies will be fleeting, as research from Bank of America shows. 

The investment bank calculates investors' bullish or bearish bias to "buy the dip" by dividing the average return on positive days by the return on negative days.

This indicator spiked higher several times over the pandemic — once to the highest level going back at least 25 years. But now it sits at the lowest level since April 2019. 

"Muted up days [versus] down days this month seem to indicate weakening support from [buy-the-dip] behavior, particularly in the context of price action since the start of the AI wave," BofA wrote in a recent note to clients.

JPMorgan's positioning intelligence team, however, sees the recent selling in April setting up a short-term buy signal, noting that sell-offs of a similar statistical strength occurred last August and October and that, historically, the S&P 500 has rallied about 3% in the 20 days following the signal. 

Looking back, that August 2023 rally lasted about two weeks and was good for nearly 5% before stocks headed down in September again. 

And the late-October signal nearly perfectly captured the bottom just prior to the blistering end-of-year rally.

Putting it all together, stocks are facing some headwinds into the end of May — but we might be due for a meaningful bounce near-term.

"Reviewing previous election years that started strong shows that choppy weakness could last until after Memorial Day, but a summer rally is also likely. So, don’t lose faith now," writes Detrick.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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3.

Tesla ETFs Soar on Musk’s Futuristic Vision

2024-04-24 20:15:13 by Sumit Roy from etf.com

Amazing words, horrible numbers. That’s the way a lot of people characterized Tesla’s latest earnings report and conference call.

On Wednesday, the words won out as investors sent shares of the world’s largest electric vehicle maker up by 14%, its biggest gain since 2021.

That, in turn, sent the $750 million Direxion Daily TSLA Bull 2X Shares (TSLL) higher by a whopping 28%.

Even the $19 billion Consumer Discretionary Select Sector SPDR Fund (XLY) gained 1.4%, an outperformance versus the flat S&P 500. The ETF holds over 11% of its portfolio in Tesla stock.

Notably Lower Growth  

Tesla’s earnings report confirmed everything investors feared about the company’s financials in the first quarter.

Adjusted earnings per share came in at $0.45, a decline of 47% compared to the year ago period. Revenues of $21.3 billion fell by 8.7%. And the company burned $2.5 billion of cash in the quarter.  

These financial metrics are unlikely to improve imminently, according to the firm.

“In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023,” the company wrote in its Q1 shareholder update.

But investors didn’t care. The slowdown in Tesla’s growth this year was already well known to investors; it’s the reason the stock plunged 42% from the start of the year through Tuesday.  

A Futuristic Vision  

Instead, investors focused on Tesla’s cost-cutting measures, which have included layoffs of 2,700 employees at its Gigafactory in Austin, Texas, and the highly optimistic, futuristic vision for Tesla that CEO Elon Musk described in his conference call remarks.

Musk promised that the company would soon operate millions of autonomous vehicles, which he called “Cybercabs.” It would also begin selling its humanoid robot, Optimus, as soon as 2025.

Musk has a history of making bold promises that take much longer to come to fruition than he initially predicts. But he also has a reputation of delivering on many of his promises eventually.

It wasn’t just robots and autonomous cars that made Tesla investors so happy on Wednesday. The company said that it would “accelerate the launch of new vehicle models ahead of our previously communicated start of production in the second half of 2025.”

“These new vehicles, including more affordable models, will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up,” the company said.  

That assuaged some investors’ concerns that Tesla’s vehicle line-up was getting stale, while opening the possibility that growth could reaccelerate next year.

Earlier this month, Reuters reported that Tesla was abandoning its plans to build a cheap, mass market car dubbed the Model 2.

While Tesla didn’t say whether any of its new models would be comparable to the Model 2, the fact that the company was bringing new vehicles to the market was enough to excite investors.  

Competing Narratives

Still, not everyone is convinced by Tesla’s rosy words.

Analysts at Bernstein said that they “struggle with why Tesla needs a discrete robo-taxi offering.” They added that they believe widespread deployment of Tesla’s Cybercab “is 5 to 10 years away” and that autonomous vehicles “will not necessarily be a winner take all market.” 

Bank of America analysts took the other side.  

Tesla addressed “key concerns heading into the quarter and revitalized the growth narrative” they said. “In the near-term, the tide in news flow appears to suggest the risk to the stock is skewing more positively.” 

Tesla stock remains very much a battleground for competing narratives, and at least today, the bulls are winning out.  

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4.

4 Big Earnings Reports Will Drive ETFs This Week

2024-04-23 21:12:39 by Sumit Roy from etf.com

The first-quarter earnings season revs up this week, giving investors an opportunity to price stocks based on something other than macroeconomic variables like inflation and interest rates.  

This week, earnings reports are due from several titans, whose impact on the stock market could be significant. Investors will see reports from Tesla Inc. on Tuesday, Meta Platforms Inc. on Wednesday, and Microsoft Corp. and Alphabet Inc. on Thursday.  
 
Those four stocks alone compose around 15% of the SPDR S&P 500 ETF Trust (SPY) and other funds that track the S&P 500.  

Alphabet and Meta’s quarterly results will be scrutinized by investors to gauge the state of the digital advertising market, and to see how the firms’ investments in A.I. are panning out.  

Microsoft’s report will offer key insights on the status of the enterprise software market and whether A.I. is boosting revenues for the world’s most valuable company by market cap.  

Meanwhile, Tesla will give investors clues about the extent of the slowdown in the electric vehicle market and how aggressively the company plans to pursue the development of autonomous vehicles.  

Earnings Growth Slowing  

Along with the four behemoths, around 30% of S&P 500 companies will report earnings this week.  

So far, 14% of S&P 500 companies have already reported earnings, according to FactSet, and of those, 74% have reported earnings above analyst estimates. That’s less than the five-year average beat rate of 77%, but in line with the 10-year average beat rate.  

At the same time, the rate of growth in earnings in Q1 compared with the same period a year ago is tracking at 0.5%—the third-straight quarter of year-over-year increases.  

However, the headline growth masks a big divergence between companies within the S&P 500. 

According to FactSet, just five companies—Nvidia, Amazon, Meta, Alphabet and Microsoft—are responsible for all that growth and more. 

Earnings for those five are expected to grow 64.3% year-over-year in the first quarter, while earnings for the other 495 stocks in the S&P 500 are anticipated to drop 6%. 

While the market’s dependence on just a handful of stocks to power earnings higher isn’t ideal, if analysts are right, earnings growth could broaden out later this year. 

For instance, in Q4, the aforementioned five stocks are expected to see 19.8% year-over-year growth in profits, while the other 495 could see 17.3% growth.  

Earnings/Price Relationship  

Earnings are the lifeblood of the equity market. Long term, the ultimate driver of share prices is profit.  

However, in the short term, that relationship doesn’t always hold. Multiples—the amount investors are willing to pay for a given amount of earnings—can go up and down significantly for all sorts of reasons, and their movement often overwhelms any change in profits. 

This year, energy is the best-performing sector in the stock market, with a 15% gain for the Energy Select Sector SPDR Fund (XLE). But energy is expected to see some of the weakest earnings performance in Q1 and the full year, with profits forecast to drop 26% and 4%, respectively.  

On the other hand, stocks in the information technology sector are lagging with a 2% gain this year despite anticipated growth of 20% and 18% in earnings for Q1 and the full year, respectively.  

There are several reasons stock performance might disconnect from earnings growth in the short term.  

Perhaps the growth is already priced in; or investors don’t anticipate the growth to last; or they just aren’t willing to pay for the growth due to various factors.  

In the case of technology, those stocks may be taking a breather after a massive run up last year.  

So yes, over the long term, earnings are the primary driver of stocks, but that says nothing about the short term.  

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5.

Why the Magnificent 7's 'momentum is collapsing'

2024-04-23 07:13:41 by Josh Schafer from Yahoo Finance

The run may be over for the seven stocks that drove the lion's share of the stock market rally over the past year. 

UBS Investment Bank's chief US equity strategist Jonathan Golub downgraded six of the "Magnificent Seven" stocks — Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), and Nvidia (NVDA) — from Overweight to Neutral in a new research note on Monday. 

His call comes as the Magnificent Seven, which also includes Tesla (TSLA), just endured its largest weekly market cap loss in history. All seven of the Big Tech leaders are off their recent highs, a decline punctuated by a 10% single-day drawdown for Nvidia on Friday, its worst one-day price performance since March 2020, though the AI darling rebounded 4% on Monday.

Golub, who rates sectors within the S&P 500 (^GSPC), not individual stocks, remains Overweight on technology outside of the six stocks named in his note. 

But for the large companies that have grown earnings significantly over the past year, Golub believes the tide may be shifting and other areas are set to outperform the largest stocks in the S&P 500. 

"Our downgrade of the Big 6 — from Overweight to Neutral — is not predicated on extended valuations, or doubts about AI," Golub wrote.

"Rather, it is an acknowledgment of the difficult comps and cyclical forces weighing on these stocks. These forces do not apply to other TECH+ companies or the rest of the market in the same way."

Earnings for the S&P 500 have largely been driven by profit growth at the large tech firms. That's expected to play out again during first quarter reports, with FactSet projecting Amazon, Alphabet, Meta, Microsoft, and Nvidia will combine for earnings growth of roughly 64%. Meanwhile, the other 495 companies in the S&P 500 are expected to report an earnings decline of 6%. 

But over the course of the year, this is expected to shift. 

Consensus estimates from FactSet show earnings growth for those five companies is set to end the year just shy of 20% year over year in the fourth quarter, reflecting significantly slower growth than their prior pace. 

By that point, consensus expects the other 495 companies to grow earnings by about 17% compared with the prior year, a significant uptick from their current growth rate.

"Investors attribute the run in mega cap stocks to animal spirits and the impact of AI," Golub wrote. "However, our work indicates that surging earnings momentum (change in forward growth projections) fueled this upside. Unfortunately, this momentum is collapsing."

Tesla is expected to report quarterly results on Tuesday, with results from Meta, Microsoft, and Alphabet coming later this week.

This shift in where earnings are growing most could be "disruptive in the near term," Golub added. 

But given increasing signs that the US economy is growing faster than expected this year, Golub thinks a broadening out in earnings performance over the next year keeps his call for the S&P 500 to end the year at 5,400 in play. The benchmark index closed at 5,010 on Monday.  

"This target remains supported by broadly positive fundamentals and a robust economy," Golub wrote. 

Reuters / Reuters

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices.

Read the latest financial and business news from Yahoo Finance

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6.

Nasdaq 100 Breaks 3-Day Losing Streak As Tech Stocks Rebound Ahead Of Earnings Week

2024-04-22 22:28:31 by Piero Cingari from Benzinga

The Nasdaq 100 index, as tracked by the Invesco QQQ Trust (NASDAQ:QQQ), ended Monday 1% higher, breaking a three-day losing streak as traders prepare for a crucial week of earnings reports from some of the tech sector’s most influential names.

This week’s earnings lineup features four Magnificent Seven giants like Tesla Inc. (NASDAQ:TSLA), which will report on Tuesday, followed by Meta Platforms Inc. (NASDAQ:META) on Wednesday, and both Microsoft Corp. (NYSE:MSFT) and Alphabet Inc. (NASDAQ:GOOGL) slated for Thursday.

PDD Holdings Inc. (NASDAQ:PDD) led Monday’s rally among the Nasdaq 100 stocks by rallying over 9%, followed by Nvidia Corp. (NASDAQ:NVDA), which climbed 4.4% after experiencing a sharp 10% drop on Friday. The chip sector, represented by the VanEck Semiconductor ETF (NYSE:SMH) showed strength, advancing 1.9% for the day.

Last week marked the Nasdaq 100 Index’s largest weekly drop in over 17 months, dragging the index to its longest losing streak since December 2022.

Also read: ‘Apple Shot Itself In The Foot:’ Telegram Founder Says Cupertino iPhone Market Share In China Will ‘Keep Shrinking’

UBS Cautions In Tech Sector

UBS Group AG's chief U.S. equity strategist Jonathan Golub has advised caution on tech stocks.

As reported by Bloomberg, UBS downgraded its stance on the ‘Big 6’ technology giants—Alphabet Inc., Apple Inc. (NASDAQ:AAPL), Amazon.com Inc. (NASDAQ:AMZN), Meta Platforms Inc., Microsoft Corp., and Nvidia Corp.— from Overweight to Neutral amid slowing earnings momentum.

Golub suggests that the downturn in tech earnings momentum will be driven by wider cyclical challenges, not by worries about valuations or the industry's prospects in artificial intelligence.

Read also: Microsoft ‘In Unique Position To Scale Gen-AI Revenue,’ Goldman Sachs Says Ahead Of Q3 Earnings

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This article Nasdaq 100 Breaks 3-Day Losing Streak As Tech Stocks Rebound Ahead Of Earnings Week originally appeared on Benzinga.com

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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7.

SOXL Sees 10% AUM Gain; ETF Weekly Flows

2024-04-22 21:05:22 by etf.com Staff from etf.com

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8.

Why Investors Should Choose the Nasdaq-100 Over the Ark Innovation ETF

2024-04-22 18:17:00 by Will Healy, The Motley Fool from Motley Fool

Ark Invest and its leading exchange-traded fund, the Ark Innovation ETF (NYSEMKT: ARKK), have gained significant attention in recent years. The investment management firm led by Cathy Wood and its various industry-specific funds likely influenced investors to more closely examine companies that are focused on innovation.

However, for all the publicity Wood has attracted, the Ark Innovation ETF has typically underperformed the Invesco QQQ Trust (NASDAQ: QQQ), a passively managed fund that tracks the tech-heavy Nasdaq-100 index. Due to that fact alone, the Ark Innovation ETF will have much to prove before investors should choose it over the Invesco fund.

The Ark Innovation ETF

At least 65% of the Ark Innovation ETF's assets are held in the stocks of companies with businesses built on what it terms "disruptive innovation." In particular, that description encompasses domestic and foreign companies making advancements in four areas:

• The "genomic revolution," or work devoted to DNA technologies.
• Robotics, automation, and energy storage.
• The "next generation internet," which includes artificial intelligence (AI).
• Fintech.

At the height of the 2021 bull market, the Ark Innovation ETF looked like the new Nasdaq, as it was dramatically outperforming the Nasdaq-100. However, the subsequent bear market in 2022 exposed the fund's shortcomings, and it experienced considerable underperformance. Over the last five years, Ark Innovation investors paid an annual expense ratio of 0.75% to watch their actively managed fund fall by 11%.

Moreover, the fund largely failed to profit from 2023's bull market in AI stocks. Over the past 12 months, the Invesco QQQ, which has an annual expense ratio of just 0.2%, rose by 30%. The Ark Innovation ETF returned around 8%. Outside of two brief periods during the past year, Ark Innovation lagged.

Ark's Innovation successes

The Ark Innovations fund's No. 1 holding, at nearly 10% of assets, is Tesla. Admittedly, Wood's initial forecast for that company proved correct. In 2018, Ark Invest predicted that Tesla would reach $267 per share at a time when the stock was trading at less than 10% of that value. While it has since pulled back below that level, Tesla had risen to that price by 2021.

Now, Ark Invest forecasts that Tesla will reach $2,000 per share by 2027, a prediction based on the expectation that it will deliver major advancements in self-driving technology in the interim. Only time will tell whether Tesla will reach that level, but Ark's previous correct call does give its current view some added credibility.

Other successes for Ark include Bitcoin, which it first bought at $250. While the cryptocurrency has not reached the $1 million per coin level predicted by Ark Invest, Bitcoin's recent price of around $66,000 has provided the fund with massive returns.

Where Ark Innovation has fallen short

Nonetheless, other aggressive calls have thus far fallen short. Ark Invest predicted Roku would reach $605 per share in 2026. While conditions could change, Roku's current share price is less than 10% of that.

That challenge is even more significant with Zoom Video Communications. Ark Invest predicted that Zoom will reach $1,500 per share by 2026 as a base case. However, from its current price of about $60 per share, reaching that level would require a 25-fold gain. Even Ark's $700 per share bear case for Zoom looks extremely ambitious, given that it's currently trading at less than 10% of that.

Furthermore, Ark Invest has missed with stocks like Teladoc Health, a one-time major holding that is now Ark Invest's 16th-largest position. The fund's Teladoc position has changed little, even as Teladoc fell from more than $300 per share at the height of the pandemic to about $13 per share as of the time of this writing.

Hence, while Ark Invest's correct calls have bolstered the reputation of the fund, its missed calls (at least so far) have proven costly.

Should investors buy the Ark Innovation ETF?

Although Ark Invest could make a comeback, most investors would likely be better off putting their tech-sector money into the Invesco QQQ trust. True, Ark Invest's team made some aggressive calls that proved correct. And some of the picks that can currently be viewed as "missed calls" could turn out to be issues of timing. Investors should not write off the possibility that many Wood investments now languishing could eventually produce impressive comebacks.

Nonetheless, the Ark Innovation ETF has typically underperformed the Invesco QQQ and charged higher fees for those weaker returns. Until the Ark fund's returns prove otherwise, it is hard to argue against the idea that investors looking for tech-sector exposure should choose the Invesco QQQ Trust instead.

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Why Investors Should Choose the Nasdaq-100 Over the Ark Innovation ETF was originally published by The Motley Fool

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9.

Why the stock market is having 'digestion problems' this earnings season

2024-04-22 15:26:50 by Josh Schafer from Yahoo Finance

Earnings season hasn't been able to keep the stock market rally afloat over the past week. 

After an aggressive rally to all-time highs to start the year, the S&P 500 (^GSPC) has tumbled in April as rising bond yields and slimmed expectations for Federal Reserve interest rate cuts have put a damper on investors' enthusiasm. 

And given the significant rise in share price of some of the market rally's darlings, even strong earnings aren't moving the needle for stocks. 

"The broader market is having digestion problems in and around this earnings season," Julian Emanuel, who leads Evercore ISI's equity, derivatives, and quantitative strategy, told Yahoo Finance.

This has broadly been seen across stock reactions in the day following the release of quarterly results for the 65 S&P 500 companies that have reported results so far this season. Stocks that top Wall Street's estimates have risen 0.8% in the next trading session, slightly lower than the 0.9% average seen over the last few years, per Emanuel's research.

Meanwhile, companies that disappoint on both metrics are taking a bigger hit than normal, with the average stock falling 5.8% in the next trading action, compared to the usual 3.1% decline seen over the past five years. 

"Given these extended valuations [in the S&P 500], even good news may not be good news, particularly in these names that have run as far as they have," Emanuel said.

Emanuel highlighted the recent price action following JPMorgan's (JPM) results, which topped Wall Street's estimates for both revenue and earnings per share. But the stock — which had hit multiple record highs earlier this year — traded lower on the day of its earnings report as the company didn't boost its 2024 interest income guidance like analysts had hoped. 

Citi US equity strategist Scott Chronert echoed Emanuel's sentiment following the price action. 

"Markets have priced in a higher probability of the Goldilocks scenario playing out this year, introducing more downside risk to 'good but not good enough' news," Chronert wrote in a note to clients on the day JPMorgan reported earnings. "While very early, the first set of 1Q reports from the banks highlights this risk of guidance falling short of lofty implied growth expectations, even as the overall fundamental picture remains healthy."

A similar narrative played out Friday after Netflix (NFLX) topped Wall Street's earnings and revenue estimates, flexing earnings per share growth of more than 83% from the year prior. But investors appeared hung up on revenue guidance for the second quarter, which came in at $9.49 billion instead of $9.51 billion, among other factors. The stock, which had rallied more than 150% in the past 18 months, sold off more than 8% on Friday.

Evercore ISI analyst Mark Mahaney's top reason the stock traded lower after the report was simply "expectations were high, and this wasn’t a beat & raise [guidance] quarter."

ASSOCIATED PRESS

This backdrop comes as one of the busiest weeks of S&P 500 financial releases in the quarter is set to greet investors. Meta (META), Microsoft (MSFT), and Alphabet (GOOGL, GOOG) will headline the week of earnings results, and all three face stiff comparisons. Meta is expected to grow earnings by more than 96%, per Bloomberg data. Meanwhile, analysts project Alphabet's earnings grew by more than 30% this quarter compared to last year. Microsoft is expected to see nearly 16% growth. 

All three are part of the top 10 stocks in the S&P 500 by market cap, which Goldman Sachs noted on April 5 are expected to drive earnings growth for the index this quarter. The top 10 stocks in the S&P 500 — primarily the "Magnificent Seven" — are expected to see earnings grow by 32% in the first quarter. Meanwhile, the other 490 stocks are projected to produce an earnings decline of 4%.

Given the market's recent jitteriness around rising yields and the lack of hope around Fed rate cuts, the performance of these companies will be "pivotal" for the market's direction moving forward, SoFi head of investment strategy Liz Young wrote on X, formerly Twitter, on Friday.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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10.

1 No-Brainer ETF to Buy With $100 Right Now

2024-04-22 11:58:00 by Neil Patel, The Motley Fool from Motley Fool

There's no arguing with the fact that the stock market has done a wonderful job of building investors' wealth over long periods of time. But while many people focus intensely on the S&P 500, Nasdaq Composite index, or the Dow Jones Industrial Average, there's another index that should be on your radar.

I'm talking about the Nasdaq-100 index. Including dividends, it has produced a remarkable return of 448% in the past decade. This means that a $10,000 investment in April 2014 would be worth $54,800 today.

If you want to gain exposure to this winning investment vehicle, then I suggest you take $100 right now and buy this exchange-traded fund (ETF).

A good choice for some investors

The ETF you should consider adding to your portfolio is the Invesco QQQ Trust (NASDAQ: QQQ). It tracks the Nasdaq-100 index, which contains the 100 largest non-financial companies listed on the Nasdaq exchange. Buying this ETF gives investors access to some of the most tech-savvy businesses out there.

You should know that the so-called "Magnificent Seven" stocks have a combined weighting in the Invesco QQQ Trust of about 40%. As a result of this, investors have their capital tied up in some very powerful broad secular trends that are shaping up the economy, like digital advertising, electric vehicles, artificial intelligence, streaming entertainment, digital payments, and cloud computing.

That concentration is precisely why the Invesco QQQ Trust has performed so well. These companies typically exhibit much more growth potential than the average business out there. They have come to dominate their respective industries. And they continue to focus on innovation and disruption to better serve their customers and further penetrate existing and new markets.

The flip side of better growth prospects is a higher valuation. The average stock in the Invesco QQQ Trust carries a price-to-earnings ratio of 35. That represents a huge premium to the S&P 500. But for those investors who want to possibly achieve higher returns, this ETF should be a top choice. It has worked out well in the past.

Don't ignore these variables

There are other factors that you must learn about before putting money in the Invesco QQQ Trust. One important thing to always keep in mind is the fee structure. This ETF carries an annual expense ratio of just 0.2%. On a $10,000 investment, that amounts to $20 a year. That's a low price to pay, which is clearly a positive.

I'll point to an overlooked benefit. That's the simple fact that buying the Invesco QQQ Trust is a low-maintenance way to build long-term wealth. You don't need expert financial analysis skills or the time to read annual reports and listen to earnings calls. It's an investment vehicle that requires zero effort.

Even some of the most popular professional money managers have failed to outperform the Invesco QQQ Trust. Just look at Ark Invest, headed up by famed investor Cathie Wood. Her firm's flagship fund, the Ark Innovation ETF, has put up a negative total return of 6% in the past five years, which doesn't come anywhere close to the Invesco QQQ Trust's gain. Adding insult to injury, the Ark Innovation ETF carries an expense ratio that's almost four times higher.

You're right to wonder if now is still a good time to invest $100 in the Invesco QQQ Trust, particularly when it sits near its all-time highs. In my opinion, it's always a smart move to put money to work in the stock market. The best strategy is to dollar-cost average, thereby eliminating the need to correctly time the market.

Past performance is never indicative of future results. But a decade from now, you'll likely be happy that you invested in the Invesco QQQ Trust today.

Should you invest $1,000 in Invesco QQQ Trust right now?

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11.

Fed's favorite inflation gauge and Big Tech earnings greet a slumping stock market: What to know this week

2024-04-22 08:51:58 by Josh Schafer from Yahoo Finance

The market rally is at its most fragile point in months.

The S&P 500 (^GSPC) ended Friday below 5,000, its first close below that mark since late February. Meanwhile, the Nasdaq Composite (^IXIC) dropped more than 5% on the week, while the Dow held flat.

This week, critical readings on economic growth and inflation, as well as the start of Big Tech earnings, will determine if the malaise continues.

On the economic data side, the advanced reading of first quarter economic growth is slated for Thursday, followed by the March reading of the Personal Consumption Expenditures index, the Fed's preferred inflation gauge, on Friday.

In corporate news, a slew of S&P 500 companies are expected to report quarterly results headlined by Meta (META), Microsoft (MSFT), Alphabet (GOOGL, GOOG), Tesla (TSLA), and Chipotle (CMG). 

The Fed's preferred inflation gauge

Several months of bumpy inflation readings have forced investors to scale back their projections for Federal Reserve interest rate cuts this year. 

On Friday, Chicago Fed president Austan Goolsbee said "progress on inflation has stalled" when noting that it "makes sense" for the central bank to wait for more clarity on inflation's path. 

This makes Friday's PCE reading all the more critical.

Economists expect "core" PCE clocked in at 2.7% in March from the previous year, down from February's 2.8% annual gain. Over the prior month, economists expect "core" PCE rose 0.3%, in line with last month's change.

"Should core PCE inflation come in around 0.25% [month-over-month] for March and April, the year-on-year reading will slow from 2.8% to 2.6%, giving the Fed cover to begin 'gradually' adjusting policy rates lower starting in June or July," Citi economist Andrew Hollenhorst wrote in a note to clients on April 17. 

Growth update

Part of the reason investors had largely taken the repricing of Fed interest rate cuts in stride has been an increasingly positive economic backdrop. Throughout the first quarter, economists have been raising their projections for economic growth. Thursday will bring the first look at whether the US economy grew as fast as forecast in the first three months of this year.

Economists expect that the US economy grew at an annualized rate of 2.5% in the first quarter, lower than the 3.4% seen in the fourth quarter of 2023. 

"Incoming data continue to point to ongoing economic resilience in an environment of higher rates," Bank of America US economist Michael Gapen wrote in a note to clients on Friday. "The consumer continues to remain strong. The economy has cooled modestly since the outsized 4.9% growth rate seen in 3Q, but what cooling there is has been gradual."

Earnings aren't impressing

Given the significant run-up in share price that some of the market rally's darlings have experienced this year, even better-than-expected earnings aren't moving the needle for stocks.

"The broader market is having digestion problems in and around this earnings season," Julian Emanuel, who leads Evercore ISI's equity, derivatives, and quantitative strategy, told Yahoo Finance.

This has broadly been seen across stock reactions the day following the release of quarterly results for the 65 S&P 500 companies that have reported results so far this season. Stocks that top Wall Street's estimates have risen 0.8% in the next trading session, slightly lower than the 0.9% average seen over the last few years, per Emanuel's research.

Meanwhile, companies that disappoint on both metrics are taking a bigger hit than normal, with the average stock falling 5.8% in the next trading action, compared to the usual 3.1% decline seen over the past five years.

"Given these extended valuations [in the S&P 500], even good news may not be good news, particularly in these names that have run as far as they have," Emanuel said.

Big Tech on deck 

With earnings reports not satisfying investors, the baton will be passed to one of the strongest parts of the market over the past year: Big Tech. 

Despite a sell-off across tech last week after disappointing results from chipmakers and Netflix (NFLX), earnings growth expectations are still sky-high for Meta, Microsoft, and Alphabet, which are all expected to report in the week ahead. 

FactSet noted on Friday that these companies, along with Nvidia (NVDA) and Amazon (AMZN), are expected to have grown earnings by 64.3% in the first quarter. The other 495 companies are projected to see earnings decline by 6%. 

Surging yields

Outside of earnings, investors will closely watch the economic data this week to see how it might shift movements in rising bond yields, which are becoming a pain point for investors again.

The 2-year Treasury yield shot up to 5% on Tuesday for the first time since the most recent stock market bottom in October 2023. The move came as Federal Reserve Chair Jerome Powell said it's taking "longer than expected" for inflation to fall to its 2% target.

And Evercore ISI's Emanuel believes this will be a key pain point for stocks, just as it was during a sell-off in the market last fall.

"The reason it might be more of the concern at this point is because of that implicit promise that markets have traded on of three [Fed rate] cuts dialed back," Emanuel said. "And if you look at it going back to March, I think it's a lot more than a coincidence the market rolled over from the highs literally precisely the moment the market started pricing in fewer than those three promised cuts." 

Emanuel cautioned that it might be time to get defensive in the market because of this. He recommended exposure to sectors such as Health Care (XLV) and Consumer Staples (XLP) while also noting the roughly 5% that can be earned by holding cash in a money market account is still a viable portion of a portfolio.

Weekly Calendar

Monday

Economic data: Chicago Fed Nat Activity Index, March (+0.05 prior)

Earnings: Albertsons (ACI), Bank of Hawaii (BOH), Cleveland Cliffs (CLF), Nucor (NUE), SAP (SAP), Truist (TFC), Verizon (VZ), Zions Bancorporation (ZION)

Tuesday

Economic data: S&P Global US manufacturing PMI, April, preliminary (52.0 expected, 51.9 previously); S&P Global US services PMI, April, preliminary (52 expected, 51.9 previously); S&P Global US composite PMI, April, preliminary (52 expected, 52.1 previously); Richmond Fed Manufacturing Index, April (-11 prior); New home sales, March (670,000 expected, 662,000 previously); New home sales, month-over-month, March (1.2% expected, -0.3% previously)

Earnings: Freeport-McMoRan (FCX), General Electric (GE), General Motors (GM), Halliburton (HAL), JetBlue (JBLU), Lockheed Martin (LMT), Mattel (MAT), PepsiCo (PEP), Raytheon Technologies (RTX), Spotify (SPOT), Steel Dynamics (STLD), Tesla (TSLA), UPS (UPS), Texas Instruments (TXN), Visa (V) 

Wednesday

Economic data: MBA Mortgage Applications, week ending April 19 (+3.3% prior); Durable Goods Orders, March preliminary (+2.5% expected, +1.3% prior)

Earnings: Meta Platforms (META), AT&T (T), Boeing (BA), Chipotle (CMG), Ford (F), Humana (HUM), ADP (ADP), eBay (EBAY), General Dynamics (GD), Hilton (HLT), IBM (IBM), O'Reilly Auto Parts (ORLY), ServiceNow (NOW), Viking Therapeutics (VKTX)

Thursday

Economic data: First quarter GDP, first estimate (+2.5% annualized rate expected, +3.4% previously); First quarter personal consumption, first estimate (+2.6% expected, 3.3% previously); Initial jobless claims, week ended, April 20 (215,000 expected, 212,000 previously); Pending home sales, month-over-month, March (+1.0% expected, +1.6% previously)

Earnings: Alphabet (GOOGL), Microsoft (MSFT), American Airlines (AAL), AstraZeneca (AZN), Caterpillar (CAT), Intel (INTC), Mobileye (MBLY), Roku (ROKU), Snap (SNAP), Royal Caribbean (RCL), Southwest (LUV), T-Mobile (TMUS)

Friday

Economic data: Personal income, month-over-month, March (+0.5% expected, +0.3% previously); Personal spending, month-over-month, March (+0.6% expected, +0.8% previously); PCE inflation, month-over-month, March (+0.3% expected, +0.3% previously); PCE inflation, year-over-year, March (+2.6% expected, +2.5% previously); "Core" PCE, month-over-month, March (+0.3% expected, +0.3% previously); "Core" PCE, year-over-year, March (+2.7% expected; +2.8% previously); University of Michigan consumer sentiment, April, final reading (77.9 expected, 77.9 previously)

Earnings: Exxon Mobil (XOM), Chevron (CVX), Charter Communications (CHTR), Colgate (CL)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices.

Read the latest financial and business news from Yahoo Finance

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12.

ETF Spotlight: SPY Falls on Inflation News

2024-04-19 12:00:00 by Lucy Brewster from etf.com

The SPDR S&P 500 ETF Trust (SPY) has fallen more than 2% this week on a broader market selloff, veering from the stellar bull run for the fund, which tracks the S&P 500.

The ETF, which follows a market cap weighted index of large and mid-cap stocks, surged at the end of last year and through the first quarter of this year on the gains of high-flying tech stocks, including AI-focused chip maker Nvidia. 

Overall, the S&P 500 gained 10% over the first quarter of 2024 when the index soared past 5,000 to set the first of several all-time highs. The SPY ETF is still up 6.5% year to date, but in the past week, is down 2% on news that inflation has been stickier than expected.

CPI Report Triggers Selloff

The March consumer price index (CPI), released last week, rose 3.5% year over year, indicating that inflation is still cooling at a slower rate than Federal Reserve bankers had hoped.

“After a relentless, double-digit rally in the S&P 500, investors turned slightly more bearish this week due to a surge in bond yields,” etf.com Sumit Roy said. “Three straight, higher-than-expected inflation prints were the catalyst for the downturn, and now we’ll see whether this sell off is a garden-variety pullback or turns into something bigger in the coming weeks,” he added.

Investors have drained $13.6 billion in outflows from SPY since the beginning of April, according to etf.com data. Overall, outflows year to date from SPY total $22.8 billion. 

Contact Lucy Brewster at lucy.brewster@etf.com.

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13.

Active ETFs Gain Appeal Amid Volatility

2024-04-18 21:08:59 by Jeff Benjamin from etf.com

As the bull market for stocks starts looking long in the tooth, and inflation, interest rates and growing geopolitical unrest boost market volatility, investors and financial advisors are leaning more heavily on actively managed ETFs in typical late-cycle fashion.

During the year's first three months, $60 billion, or 30%, of all ETF flows went into actively managed exchange-traded funds, according to a recent Fidelity Investments report. Active ETFs punched above their weight class, since they account for just 7% of total ETF assets.

“One of last year’s burgeoning trends was the increasing prevalence of actively managed ETFs,” the report stated.

That trend carried into the first quarter of this year with active ETFs representing 90 of the 138 ETFs launched so far this year, according to Fidelity’s research.

Passive indexed strategies still dominate ETF flows, with $132 billion worth of net flows into indexed ETFs during the quarter.

Chris Shuba, chief executive and founder of Helios Quantitative Research in Granite City, Calif., said diversification is moving front and center with financial advisors, especially after the past few years of seeing a handful of stocks dominate many of the broad market indexes.

“I believe the Mag Seven, as a group, are a strong representation of innovation and potential in the technology and near-technology space,” he said. “I wouldn't argue to completely divest from the Mag Seven, but diversification could be very beneficial at this stage.”

Among the largest actively managed ETFs, the$32.6 billion JPMorgan Equity Premium Income ETF (JEPI) brought in $1.64 billion during the quarter, according to etf.com data. The $11.9 billion JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) brought in $2.57 billion. 

While the growing trend toward active management is a popular move when the broad markets start slipping, Fidelity’s research shows some investors are still following familiar patterns.

For example, of the roughly $200 billion of inflows into U.S. ETFs during the first three months of the year, more than half of those net flows went into U.S. equity funds.

Beneath the flows into indexes, the research shows technology-focused ETFs leading all sectors in terms of net flows at $9.5 billion, while utility sector ETFs led on the other end with $2.3 billion worth of net outflows.

John Khoury, senior wealth manager at Savvy Advisors in Boson, views the money in motion as a prudent strategy for avoiding letting portfolios become too “top heavy.”

“It’s important to rebalance portfolios that have become over-exposed to stocks relative to bonds, cash, and alternative investments given the strong stock market performance over the last year,” he said. “Although bonds aren’t as exciting as stocks, they do offer attractive yields that can help reduce volatility and risk for an investor’s portfolio, especially for investors close to retirement or in-retirement.”

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14.

Here’s What’s Happening in Markets: April 18

2024-04-18 17:25:38 by Kristin Myers from etf.com

Markets moved decidedly higher after fluctuating midmorning Thursday, potentially snapping a 4-day losing streak, the S&P 500's longest slide since January, according to FactSet. 

SPY, the SPDR S&P 500 ETF Trust, added 0.5% while DIA, the SPDR Dow Jones Indus0.5%trial Average ETF Trust gained 0.8%. QQQ, the tech-heavy Invesco QQQ Trust which mirrors the Nasdaq, rose 0.3% as investors looked ahead to tech earnings.

Investors are looking to the tech sector today for optimism. Netflix is the first of the megacap (companies with a market capitalization of roughly $200 billion or more) technology companies set to report first quarter corporate earnings after the bell. Tech companies have led the markets this year despite a higher-for-longer rate environment that typically keeps them under pressure. 

XLK, the Technology Select Sector SPDR Fund (which despite not holding Netflix remains a tech sector barometer), fluctuated between higher and lower ahead of Netflix's earnings. The fund is up 5% for the year, and a whopping 37% since last year. XLG, the Invesco S&P 500 Top 50 ETF which holds Netflix in its fund, jumped nearly half a percentage point on Thursday morning. 

XLK 1-Year Chart

Source: etf.com

SQQQ, the ProShares UltraPro Short QQQ—which bets that tech stock prices will drop—was in the red ahead of tech earnings, sinking about a half-percentage point.

Ahead of the bitcoin halving this week, bitcoin prices were on the rise, jumping to nearly $63,800 according to data from CoinMarketCap. Cryptocurrency ETFS were the top gainers Thursday, according to etf.com data. BTFX, the Valkyrie Bitcoin Futures Leveraged Strategy ETF had the biggest rise, jumping more than 9%. BITX, BITU, CONL, and CRPT all advanced 7%-10%. 

Bitcoin halvings have historically preceded rallies in bitcoin's price. But it's unclear if history will repeat itself this year since the inception of spot bitcoin ETFs which have already caused jumps in bitcoin.

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15.

High rates haven't always been a problem for stocks

2024-04-18 08:00:28 by Josh Schafer from Yahoo Finance

Rising bond yields have been a key catalyst for stock drawdowns over the past year. But higher rates haven't always been bad for stocks. 

In an analysis going back to 1990, BMO Capital Markets chief investment strategist Brian Belski found the S&P 500 (^GSPC) delivered an average annual return of 7.7% in months when the 10-year Treasury yield was less than 4%, compared to an average annual return of 14.5% in months when the 10-year was 6% or higher.  

Stocks also performed better when rates were rising rather than falling. The average annual rolling one-year return for the S&P 500 during a falling rate environment was 6.5%, compared to 13.9% in a rising rate regime.

"This makes sense to us since lower rates can be reflective of sluggish economic growth and vice versa," Belski wrote in a research note published Monday.

Since the start of April, bond yields have soared, with the 10-year Treasury yield (^TNX) up roughly 40 basis points to roughly 4.58% and hovering near its highest level since November 2023. This comes as the S&P 500 has fallen more than 4% in the same time period.

"In a higher interest rate environment, certainly higher than 0%-1% or 0%-2%, stocks traditionally do very well," Belski later told Yahoo Finance in an interview. "We still think, from these levels, stocks are higher at year-end." 

Belski acknowledged in his note that a large part of the recent weakness seen across the major indexes has come after a string of hotter-than-expected inflation reports scaled back investor expectations for Federal Reserve cuts this year. Markets are now expecting two interest rate cuts this year, per Bloomberg data, down from a peak of seven cuts expected in January.

This has contributed to the rise in yields over the last month, but again Belski argued that the reasons behind that uptick aren't necessarily bad from a stock perspective.

"Rising interest rates can mean that the bond market is correctly anticipating future economic growth and staying ahead of inflation — things that typically benefit stock prices," Belski wrote in his research note.

Belski believes the likely path forward for rates is a "return to normalization," where the 10-year Treasury yield sits closer to its 75-year average of 5%. 

"So if we can hover between this 4% and 5% range [on the 10-Year Treasury yield] and still have strong employment, but most importantly, have very strong earnings and, oh by the way, cash flow, I think the market can do very well," Belski said.

Spencer Platt via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices.

Read the latest financial and business news from Yahoo Finance

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16.

Steering Clients Through Unstable Markets

2024-04-17 20:33:34 by Advisor Views from etf.com

Paul Schatz, president of founder of Heritage Capital in Woodbridge, Conn., spoke with etf.com about navigating client portfolios through the current market environment that includes higher than expected inflation and interest rates.

Jeff Benjamin: Are you diversifying out of the Magnificent Seven leaders?

Paul Schatz: We spent the first quarter reducing exposure to most things artificial intelligence as well as other hot and sexy stocks. Most of these positions had been held for a long while and saw parabolic rallies which are rarely sustainable. We outright sold Marvell Technology, Broadcom, Micron Technology and Tyler Technologies, while reducing position size in Nvidia and Advanced Micro Devices, for example.

JB: Where are you finding opportunities?

PS: Until very recently, I was finding almost too many opportunities in the unloved and overlooked areas like pharmaceuticals, chemicals and staples. We bought Bristol-Myers Squibb, Pfizer, CVS Health, Dow and Hershey, all downtrodden with solid dividends that no one seems to care about. We even found some less trafficked financials to buy like Moelis.

I am typically early on these kinds of buys, so I won’t be surprised if they take some time to turn around.

JB: Is the stock market at a turning point?

JS: After positioning for a 20% year in 2023, 2024 looked to be a still strong 11% to 15% for the stock market. My thesis was for a first-quarter peak followed by a less than 10% decline that bottomed by Memorial Day. From there, fresh all-time highs over the summer.

I think the March 27 high was that first quarter peak and now stocks are pulling back. I wouldn’t read too much into that. Contrary to popular belief, elections have almost no bearing on markets although the masses obsess over elections all year. If there is a quick, sharp downdraft from some geopolitical event, I would use that as a buying opportunity.

JB: Are your clients holding more cash than usual at this point?

PS: Our cash position ebbs and flows throughout the year during most years. We are definitely an active boutique.

However, over the years with the advent of fantastic new products, we are more apt to hedge the downside or own low volatility instruments or products with defined outcomes like buffered ETFs.

JB: Are you investing in bonds with the expectation for rate cuts this year?

JS: Coming in to 2024, I thought the six-to-seven rate cuts camp was clinically insane. What data were they analyzing? Nothing suggested that.

Our work said that two or three cuts would be a lot with the risk being less or none. If the 2-Year Treasury somehow spikes to 5.5%, well, Houston, we have a big and serious problem.

(Fed Chair Jerome) Powell and the FOMC would need to consider a 25-basis point hike. Talk about being embarrassingly wrong yet again.

We haven’t bought cash bonds in many quarters. I am getting closer. Perhaps a monthly unemployment number of 4% or more will be the trigger.

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17.

Investors increasingly expect 'no landing' for US economy

2024-04-17 12:39:44 by Josh Schafer from Yahoo Finance

A growing number of investors believe the US economy is headed for a "no landing" scenario, in which inflation doesn't reach the Fed's 2% target, but the US economy keeps growing. 

Thirty-six percent of respondents to Bank of America's Global Fund Manager Survey, released on Tuesday, said they believe the most likely outcome for the global economy in the next 12 months is a "no landing." This was a noted move higher from the 23% who saw the outcome a month ago and the highest level seen since June 2023, the earliest date on BofA's graph.  

Meanwhile, 54% of respondents believe a soft landing — where economic growth slows but not to the point of recession, and inflation returns to its historical average — is the most likely outcome. 

This shows a shift in the discussion on Wall Street, as just 7% of respondents believe a hard landing, where restrictive policy forces the economy into recession, is the base case. Last year, much of the debate on Wall Street was whether a hard or soft landing was in the cards for the economy.

Now, the debate has shifted to whether recent better-than-expected economic data could prohibit further progress on inflation. 

"Recessions don't hit the US economy without a catalyst of some sort, and we just don't see what is going to stop consumer spending," Jefferies US economist Tom Simons wrote in a note on April 12. "With demand still solid, it is hard to see how inflation will continue to slow down, and thus it is hard to see how the Fed can cut rates."

On Monday, retail sales data for March supported this point. Retail sales in the control group, which strips out volatile categories such as autos, building materials, and gas stations, increased 1.1% during the month. This measure feeds directly into GDP and, combined with revisions higher to February's release, prompted economists to boost their projections for economic growth in the first quarter. 

Goldman Sachs now believes quarter-over-quarter growth in the US economy hit 3.1%, up from a prior projection of 2.5%. Meanwhile, the Atlanta Fed's GDP Now tool now sees growth at 2.8% in the first quarter, up from a prior forecast of 2.4%.

These revisions higher come as expectations for inflation have also been on the rise after several hotter-than-expected consumer price readings through the first three months of the year. This has pushed an increasing number of economists to suggest the Fed may not cut rates this year, resulting in a "no landing" for 2024.  

"The lack of moderation in consumer spending and inflation will undermine Fed officials’ confidence that inflation is on a sustainable course back to 2%," Nationwide chief economist Kathy Bostjancic wrote in a note on Monday. "[Recent data] likely delays rate cuts to September at the earliest and could push off rate reductions to next year."

ASSOCIATED PRESS

The market has been pricing in signs of a "no landing" scenario in recent weeks, according to Morgan Stanley chief investment officer Mike Wilson.

Wilson cited a recent surge in 10-year Treasury yields (^TNX) and a fall in interest rate-sensitive areas like the small-cap Russell 2000 Index (^RUT) as examples. Such a scenario isn't bad for all areas of the stock market, Wilson noted, and could lead to a healthier backdrop for earnings growth.

"With rates now posing more of a risk to valuation, we prefer large cap areas of the market that are underpriced for a better than expected growth regime, such as large cap Energy," Wilson wrote. 

Morgan Stanley Reserach

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest economic news and indicators to help inform your investing decisions.

Read the latest financial and business news from Yahoo Finance

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18.

Stocks set to follow 'bumpier path' forward after stellar first quarter

2024-04-17 09:30:45 by Josh Schafer from Yahoo Finance

Stocks rose in what seemed like a straight line over the first three months of 2024 as the S&P 500 (^GSPC) notched its best first quarter return in five years.

Since the start of April, it's been a different story. 

The S&P 500 has dropped nearly 4% this month as investor hopes that the Federal Reserve will cut rates continue to fade. 

"We've said at the FOMC that we'll need greater confidence that inflation is moving sustainably toward 2% before it would be appropriate to ease policy," Fed Chair Jerome Powell said Tuesday. "The recent data have clearly not given us greater confidence and instead indicate that it's likely to take longer than expected to achieve that confidence."

The 2-year Treasury yield popped following the comments, surpassing 5% for the first time since November while stocks sunk to session lows.

"We continue to expect a bumpier path forward relative to the abnormally smooth first quarter ride," Truist co-CIO Keith Lerner wrote in a note to clients published late Monday. 

Lerner noted the S&P 500's 4% intra-year drop is still a far cry from the average 14% drawdown seen over the last forty years. And during years in which the index rose 10% during the first quarter, like 2024, Lerner noted the average maximum pullback in the S&P 500 over the balance of the year was 11% and the index did not see a decline of at least 5% during the year only three times since 1980. 

"Indeed, periodic pullbacks are the admission price to the market," Lerner wrote. "And they always come with bad news."

"We've come so far, so fast," Freedom Capital Markets chief global strategist Jay Woods told Yahoo Finance.

"I don't see that next catalyst outside of individual pockets of earnings to take the market higher. And now with the rising [bond] yields again ... that broadening rally in the small caps, utilities, that story is over for now."

Inflation's path downward has proven "bumpy," as Powell put it earlier this month, with three straight Consumer Price Index reports showing larger price increases than consensus expectations.  

Meanwhile, data on economic growth has continued to come in hotter than expected, fueling further inflation concerns and contributing to scaled-back market expectations for rate cuts this year. 

Markets are now expecting two interest rate cuts this year, per Bloomberg data, down from a peak of seven cuts seen in January.

As Fed expectations get rewritten, bond yields have soared. The 10-Year Treasury yield (^TNX) is up roughly 50 basis points in April to as high as 4.67%, its highest level since November. And as seen last year, rising bond yields can be a headwind for further risk-taking in the equity market.

"[The 10-year Treasury yield] is not sending alarm signals yet that things are really at risk," SoFi head of investment strategy Liz Young told Yahoo Finance. "But I think there needs to be some right-sizing of stock valuations."

Still, some on Wall Street are calling any further downside in the market a "buyable dip."

The shifting narrative to one where inflation remains sticky but economic growth keeps accelerating can still help boost earnings and drive stocks higher, strategists have said.

"The weight of the evidence in our work still suggests we are in a bull market, yet this corrective period likely has further to go in price and/or time," Lerner wrote. 

"For investors on the sidelines and below target equity allocations, we would use a dollar-cost averaging approach and look to be more aggressive should we get a deeper and more normal correction."

Portland Press Herald via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices.

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19.

First Trust Vest Equity Buffer ETF (FAPR) Sees 40% AUM Jump From Single Day Inflows; ETF Fund Flows as of April 16

2024-04-16 21:06:33 by etf.com Staff from etf.com

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20.

Here's What's Happening in Markets: April 16

2024-04-16 19:54:50 by Kristin Myers from etf.com

Markets were wobbling Tuesday as investors continued to digest corporate earnings, hoping to snap a losing streak in the Dow.

SPY, the SPDR S&P 500 ETF Trust, was flat as the S&P 500 moved in and out of the red. The Dow remains the leader on the day, boosted by beats on both the top and bottom lines by UnitedHealth Group Inc. DIA, the SPDR Dow Jones Industrial Average ETF Trust was up roughly a third of a percentage point. The Nasdaq also teetered Tuesday, remaining flat on the day. QQQ, the tech-heavy Invesco QQQ Trust mirrored the index, struggling to stay in the green. 

Bank of America Corp. reported earlier today that profit dropped more than 18% from the same quarter last year. The dip highlighted the challenges banks are finding in the higher interest rate environment. While higher rates typically boost profit margins for financial firms, they also erode margins on consumer accounts.

XLF, the Financial Select Sector SPDR Fund dropped more than a quarter of a percentage point as investors digested the impact of rates on the financial sector. Despite the recent dip in financials, the sector has been resilient so far this year, jumping close to 7% since the start of the year.

XLF 3-Month Total Return

Source: etf.com

According to etf.com data, XLF is one of the most active ETFs Tuesday, with a total trading volume around 29 million at 1 p.m. 

Corporate earnings will continue to be a market driver for the next few weeks as investors look for clarity about the strength of the U.S. economy amid anxieties about the Federal Reserve and the future path of rate cuts. According to FactSet, roughly 6% of the S&P 500 has reported earnings so far, with 83% delivering a beat on earnings and more than half reporting upside surprises on revenue. 

For investors hoping for an interest rate boost in their portfolios, they will have to look abroad. European Central Bank head Christine LaGarde told CNBC that the bank would "moderate its restrictive monetary policy" if inflation continued to move as expected. 

VGK, the Vanguard FTSE Europe ETF which represents the largest European exposure for investors was in the red Tuesday.

Here at home, markets are forecasting a 99.5% chance the Fed will hold rates steady at its June policy meeting according to the CME Fed Watch Tool. Traders aren't anticipating rate cuts until September. 

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21.

SPDR Sees $1 Billion Single Day Outflows; ETF League Tables as of April 16

2024-04-15 21:05:56 by etf.com Staff from etf.com

(Table below reflects daily flows on April 16, 2024 and asset totals as of that date.)

ETF Brand League Table

Welcome to the etf.com league table. On this page, you’ll find the U.S. ETF market through different lenses: brand and issuer. What’s the difference? The brand is what the ETF says on the tin. For example, "iShares" is the brand of issuer "BlackRock’s" ETFs. Because many issuers license their ETF infrastructure to third parties, we present the data in both ways. The identification of the correct brand and legal issuer is done by our key data provider, FactSet.

Brand	AUM ($, mm)	Net Flows ($, mm)	% of AUM	YTD 2024 Net Flows($,M)
iShares	2,713,867.61	3.73	0.00%	36,962.02
Vanguard	2,516,291.78	1,911.24	0.08%	79,990.90
SPDR	1,273,874.15	-1,043.74	-0.08%	-14,101.30
Invesco	501,066.04	721.27	0.14%	23,488.61
Schwab	333,642.36	1.84	0.00%	5,431.53
JPMorgan	148,793.24	41.25	0.03%	12,459.47
First Trust	136,148.82	-4.15	0.00%	1,138.99
Dimensional	132,308.16	73.38	0.06%	10,750.46
VanEck	77,824.81	-428.38	-0.55%	4,989.23
WisdomTree	76,956.68	102.10	0.13%	2,147.87
ProShares	71,174.42	0.00	0.00%	-4,301.17
Fidelity	69,593.88	13.64	0.02%	13,357.88
Global X	46,753.94	62.01	0.13%	2,717.12
Direxion	46,497.22	0.00	0.00%	5,424.66
Pacer	43,192.26	58.38	0.14%	6,545.09
Avantis	39,635.77	129.89	0.33%	4,778.41
Goldman Sachs	33,488.33	-30.33	-0.09%	-533.10
PIMCO	25,744.19	52.52	0.20%	2,096.46
FT Vest	25,593.21	465.48	1.82%	3,895.30
Capital Group	25,377.95	0.00	0.00%	4,937.98
BlackRock	21,810.79	18.10	0.08%	8,797.38
FlexShares	20,878.25	-6.25	-0.03%	-610.60
Grayscale	20,845.77	-166.20	-0.80%	-16,177.57
Xtrackers	20,758.86	-32.16	-0.15%	-59.78
Innovator	18,273.06	4.16	0.02%	253.21
Franklin	15,986.63	-4.25	-0.03%	1,285.14
ARK	15,407.37	44.43	0.29%	60.81
Janus Henderson	15,249.47	35.39	0.23%	3,262.03
REX Microsectors	9,775.51	0.00	0.00%	175.28
Nuveen	8,928.34	3.54	0.04%	-121.42
Amplify	8,883.07	-1.62	-0.02%	-484.98
Alerian	8,405.11	10.45	0.12%	262.74
abrdn	8,118.75	14.73	0.18%	159.32
VictoryShares	7,583.94	-5.74	-0.08%	87.97
PGIM	7,157.70	-33.46	-0.47%	570.75
KraneShares	7,144.33	-0.28	0.00%	66.10
John Hancock	6,477.25	0.00	0.00%	103.56
BNY Mellon	5,850.25	-1.55	-0.03%	283.57
Hartford	4,615.56	3.31	0.07%	-222.14
ALPS	4,586.85	-0.95	-0.02%	572.38
US Benchmark Series	4,394.17	6.48	0.15%	352.29
IndexIQ	4,153.48	1.03	0.02%	-197.66
Alpha Architect	4,101.66	0.00	0.00%	1,567.23
Simplify	3,999.71	-0.02	0.00%	831.54
Principal	3,995.16	-1.88	-0.05%	146.29
Invesco DB	3,725.90	19.68	0.53%	-97.11
GraniteShares	3,720.78	-41.07	-1.10%	1,477.20
T. Rowe Price	3,525.74	8.87	0.25%	839.94
American Century	3,037.47	-18.15	-0.60%	41.87
US Commodity Funds	2,956.40	125.32	4.24%	-309.60
BondBloxx	2,815.17	-2.51	-0.09%	313.86
Columbia	2,739.77	3.04	0.11%	532.05
AB Funds	2,643.53	9.76	0.37%	1,168.40
Sprott	2,515.85	23.02	0.91%	53.09
Allianz	2,508.64	-0.70	-0.03%	495.62
Cambria	2,449.11	0.00	0.00%	232.22
YieldMax	2,416.99	-7.25	-0.30%	1,252.21
ActivePassive	2,408.83	0.00	0.00%	1,559.42
Bitwise	2,393.66	0.05	0.00%	1,741.44
Main Funds	2,301.80	-3.24	-0.14%	123.81
Putnam	2,213.50	7.89	0.36%	258.93
Aptus	2,026.18	0.00	0.00%	198.97
Distillate	1,852.33	0.00	0.00%	182.52
Eagle	1,799.40	0.00	0.00%	20.96
AdvisorShares	1,772.75	0.00	0.00%	372.83
Volatility Shares	1,751.67	30.61	1.75%	1,202.69
Neos	1,605.12	9.03	0.56%	771.23
Harbor	1,578.07	1.32	0.08%	230.30
Motley Fool	1,533.41	0.00	0.00%	34.95
ROBO Global	1,518.57	-2.86	-0.19%	-36.22
Inspire	1,494.44	0.00	0.00%	66.22
Vident	1,466.44	0.00	0.00%	0.43
Defiance	1,437.01	-1.18	-0.08%	142.24
Virtus	1,431.68	1.11	0.08%	275.09
Strive	1,373.36	0.00	0.00%	208.10
US Global	1,340.85	17.68	1.32%	-489.58
Eaton Vance	1,340.00	0.00	0.00%	775.78
Bridgeway	1,326.25	0.00	0.00%	119.84
SEI	1,235.88	0.09	0.01%	1,074.52
Davis	1,117.10	0.00	0.00%	19.50
DoubleLine	1,110.08	0.00	0.00%	186.78
Kovitz	1,041.21	0.00	0.00%	19.05
iM	1,013.46	2.93	0.29%	184.37
ETRACS	1,002.42	0.00	0.00%	0.00
Neuberger Berman	953.06	1.29	0.14%	156.47
CCM	952.29	-0.01	0.00%	787.74
Roundhill	949.61	0.00	0.00%	171.13
Meridian	875.67	-0.05	-0.01%	22.26
iPath	873.02	-5.54	-0.64%	-72.77
Strategy Shares	871.63	0.00	0.00%	-77.81
Timothy	852.95	0.00	0.00%	0.38
SP Funds	849.30	0.00	0.00%	177.96
SoFi	809.39	0.50	0.06%	72.52
HCM	770.11	0.00	0.00%	48.58
TCW	730.69	0.00	0.00%	-133.08
T-Rex	713.90	-11.81	-1.65%	659.51
RPAR	707.33	0.00	0.00%	-17.21
Day Hagan	699.21	-3.73	-0.53%	-16.93
Valkyrie	698.10	0.00	0.00%	538.78
Quadratic	691.15	0.33	0.05%	-211.33
Angel Oak	689.18	0.00	0.00%	368.48
Horizons	683.44	0.00	0.00%	-56.76
AXS Investments	678.33	1.25	0.18%	-37.24
Gotham	595.00	3.39	0.57%	32.82
LeaderShares	565.57	0.00	0.00%	-233.90
Bahl & Gaynor	563.17	0.00	0.00%	52.18
Cabana	557.76	0.00	0.00%	71.88
Calvert	548.58	0.00	0.00%	49.32
The Brinsmere Funds	547.82	0.00	0.00%	17.56
Credit Suisse	537.86	0.00	0.00%	-18.37
Tortoise	524.77	0.00	0.00%	-83.74
InfraCap	514.81	0.00	0.00%	21.53
Wahed	511.48	0.00	0.00%	86.53
GMO	460.50	3.20	0.69%	398.66
Monarch	442.17	0.25	0.06%	202.75
FCF Advisors	441.36	0.00	0.00%	18.80
Brookstone	439.18	1.34	0.30%	45.11
Oneascent	415.75	0.00	0.00%	54.95
ClearBridge	400.31	-0.03	-0.01%	27.07
ClearShares	392.72	0.00	0.00%	-14.31
Nationwide	385.69	-2.36	-0.61%	-47.57
Touchstone	373.33	-4.03	-1.08%	53.22
AAM	371.02	0.00	0.00%	56.01
EMQQ	359.84	0.01	0.00%	-47.17
Barclays	355.97	2.39	0.67%	31.46
Matthews	343.18	-1.27	-0.37%	-5.21
Vert	337.31	-0.17	-0.05%	13.55
CastleArk	336.99	0.00	0.00%	-14.41
Bushido	333.68	0.00	0.00%	16.56
Overlay Shares	325.07	-1.64	-0.50%	-64.21
Panagram	320.95	0.00	0.00%	93.82
Teucrium	297.32	-1.87	-0.63%	-26.74
FundX	294.31	0.00	0.00%	-0.57
TrueShares	290.85	0.00	0.00%	46.03
Adaptive	287.48	0.00	0.00%	0.61
Natixis	282.76	0.00	0.00%	174.64
USCF Advisers	279.24	0.00	0.00%	5.51
Anfield	274.68	0.00	0.00%	-2.98
Opus Capital Management	269.89	0.00	0.00%	37.87
Tidal ETFs	259.32	-12.55	-4.84%	2.47
Congress	253.46	1.51	0.59%	127.10
PlanRock	253.18	0.00	0.00%	125.24
Return Stacked	252.04	0.58	0.23%	116.30
Madison	251.09	0.00	0.00%	-4.57
Swan	244.92	0.00	0.00%	27.23
STF	228.25	0.00	0.00%	2.23
Brandes	225.87	1.77	0.79%	123.14
Burney	225.01	0.00	0.00%	3.91
Mohr Funds	223.19	0.00	0.00%	-26.10
AGF	219.56	-2.77	-1.26%	-26.53
Fairlead	211.57	0.00	0.00%	-4.70
Federated Hermes	209.47	0.00	0.00%	80.38
UBS	200.43	0.00	0.00%	0.00
RiverFront	200.37	0.00	0.00%	-5.94
Little Harbor Advisors	195.51	0.00	0.00%	-4.76
CornerCap	192.88	0.00	0.00%	1.26
Renaissance	189.17	0.00	0.00%	-23.90
Summit Global Investments	188.51	1.14	0.60%	-34.42
WBI Shares	187.32	-1.45	-0.77%	-9.17
SRH	185.32	0.00	0.00%	0.00
Saba	182.55	0.00	0.00%	17.53
Euclidean	179.83	0.00	0.00%	0.61
Syntax	178.49	0.00	0.00%	-9.21
REX	176.90	2.74	1.55%	156.61
BrandywineGLOBAL	170.96	0.00	0.00%	-2.60
Adasina	168.77	0.00	0.00%	15.25
Agility Shares	161.41	0.00	0.00%	3.07
Core Alternative	158.61	0.00	0.00%	-80.78
Thrivent	150.94	-11.08	-7.34%	-22.34
Rayliant	150.33	-0.08	-0.05%	26.88
Zacks	149.94	0.00	0.00%	53.08
Gadsden	148.57	0.00	0.00%	-1.27
Beyond	144.98	0.00	0.00%	-4.07
Siren	141.62	0.00	0.00%	-1.44
Ballast	137.45	0.00	0.00%	16.33
ROC	136.46	0.00	0.00%	53.64
Humankind	135.86	0.00	0.00%	0.02
Knowledge Leaders Capital	134.46	0.00	0.00%	-2.13
Segall Bryant & Hamill	128.30	2.77	2.16%	68.17
SoundWatch Capital	126.16	0.00	0.00%	1.91
American Beacon	125.00	0.00	0.00%	27.42
Tema	123.16	0.64	0.52%	55.06
Donoghue Forlines	119.71	0.00	0.00%	3.42
Max	117.25	0.00	0.00%	50.24
Hennessy	115.90	0.00	0.00%	53.50
Polen	113.54	0.82	0.73%	74.39
Applied Finance	109.29	0.00	0.00%	27.36
DB	107.90	0.00	0.00%	-2.06
Strategas	107.53	0.48	0.44%	1.75
Rareview Funds	101.61	0.00	0.00%	5.43
Hoya	99.71	0.00	0.00%	9.89
Conductor Fund	99.10	-1.61	-1.62%	-5.56
Impact Shares	96.35	0.00	0.00%	-0.99
FPA	95.27	1.40	1.47%	36.14
First Manhattan	91.23	0.00	0.00%	0.44
Subversive	90.76	0.00	0.00%	68.44
MarketDesk	88.81	0.00	0.00%	0.00
Leuthold	84.25	0.00	0.00%	4.15
Q3	83.82	0.00	0.00%	10.55
ERShares	83.22	0.00	0.00%	1.52
ACV	82.77	0.00	0.00%	-2.28
Absolute	81.61	0.00	0.00%	0.00
Astoria	80.28	0.00	0.00%	6.07
Convergence	80.07	0.82	1.02%	38.42
Alexis	79.56	0.00	0.00%	2.64
Altshares	78.81	0.02	0.02%	7.43
ArrowShares	78.67	0.00	0.00%	-1.47
Parametric	77.59	0.00	0.00%	30.56
Faith Investor Services	75.71	0.00	0.00%	15.56
CrossingBridge Funds	70.70	0.00	0.00%	1.70
	70.39	0.50	0.71%	70.56
Sterling Capital	69.42	0.00	0.00%	2.26
Spear	69.04	0.00	0.00%	51.38
Hilton	68.36	0.00	0.00%	49.36
F/m	67.94	0.00	0.00%	40.62
Keating	66.90	0.00	0.00%	5.55
IDX	64.13	0.00	0.00%	14.52
Logan	63.91	0.00	0.00%	-1.01
Alger	61.36	0.00	0.00%	7.60
Nicholas	60.66	0.00	0.00%	8.87
Sphere	60.29	0.00	0.00%	-2.97
Regents Park	57.36	0.00	0.00%	-7.05
Cambiar Funds	57.06	0.00	0.00%	1.20
Miller	57.01	0.00	0.00%	16.30
Adaptiv	55.92	0.00	0.00%	-1.66
Breakwave	55.74	0.00	0.00%	-15.11
EA Series Trust	55.62	0.00	0.00%	7.35
Argent	54.62	0.00	0.00%	5.54
Formidable	53.46	0.00	0.00%	-3.68
NETL	53.25	0.00	0.00%	-6.85
Academy	51.18	0.00	0.00%	0.50
SmartETFs	50.46	0.00	0.00%	-1.33
Goose Hollow	49.33	0.00	0.00%	-6.65
Aztlan	49.01	0.00	0.00%	-1.07
THOR	48.42	-0.26	-0.55%	-3.38
Western Asset	47.99	0.00	0.00%	-8.04
McElhenny Sheffield	47.77	0.00	0.00%	5.23
Texas Capital	47.60	0.00	0.00%	24.28
SonicShares	44.42	0.00	0.00%	6.27
Hull	44.39	0.00	0.00%	3.86
Leatherback	43.37	0.00	0.00%	-4.46
Acquirers Fund	43.30	0.00	0.00%	-0.06
ZEGA	42.61	0.00	0.00%	-7.09
UVA	41.85	0.00	0.00%	-2.20
Obra	40.53	0.00	0.00%	0.50
Discipline Funds	40.48	0.00	0.00%	3.79
Gabelli	39.53	0.00	0.00%	4.13
Regan	39.11	0.00	0.00%	37.64
Meet Kevin	38.72	0.00	0.00%	-2.68
River1	38.22	5.15	13.46%	38.70
Range	38.17	0.00	0.00%	21.35
Sovereign's	36.87	0.00	0.00%	7.63
Foundations	36.56	0.00	0.00%	32.05
India	36.18	0.59	1.63%	21.04
AOT	35.88	0.00	0.00%	2.82
QRAFT	34.60	1.18	3.42%	7.79
Sound Income Strategies	34.50	0.00	0.00%	3.23
Procure	34.42	0.00	0.00%	-2.49
Sparkline	34.23	0.00	0.00%	2.50
Calamos	33.39	0.00	0.00%	14.17
RAM	32.90	0.00	0.00%	2.36
Trajan	32.71	0.00	0.00%	-2.50
Martin Currie	32.48	0.00	0.00%	-1.56
Innovative Portfolios	31.85	0.00	0.00%	-0.48
Affinity	31.82	0.00	0.00%	0.00
Validus	31.45	0.00	0.00%	0.00
AlphaMark	31.43	0.00	0.00%	1.47
Cultivar	30.36	0.00	0.00%	0.00
Guru	30.05	-2.15	-7.14%	-6.16
Bancreek	29.82	0.00	0.00%	23.79
Counterpoint	29.64	0.00	0.00%	13.45
Themes	26.94	0.00	0.00%	19.10
Pinnacle	26.93	0.00	0.00%	6.30
Carbon Collective	26.83	0.00	0.00%	4.77
Tactical Funds	25.69	0.00	0.00%	1.26
FMQQ	25.17	-0.02	-0.07%	4.31
R3ETFs	25.13	0.00	0.00%	-5.20
WealthTrust	25.10	0.00	0.00%	6.11
North Shore	24.63	6.06	24.60%	24.69
Clough	23.49	0.00	0.00%	6.96
Veridien	22.94	0.00	0.00%	0.57
PMV	22.91	0.00	0.01%	-1.33
Clockwise Capital	22.29	0.00	0.00%	3.08
Vesper	21.24	0.00	0.01%	-7.18
Point Bridge Capital	21.13	0.00	0.00%	0.00
MUSQ	20.13	0.00	0.00%	5.23
Alternative Access	20.00	0.00	0.00%	7.50
Mairs & Power	19.61	0.00	0.00%	1.56
Bridges	19.32	0.00	0.00%	0.00
GGM	18.98	0.00	0.00%	4.01
DGA	17.84	0.00	0.00%	0.52
Tuttle	17.40	4.76	27.34%	15.63
Macquarie	15.65	0.00	0.00%	0.00
Robinson	15.31	0.00	0.00%	-2.56
ATAC	14.90	0.00	0.00%	-0.36
Relative Sentiment	14.80	0.00	0.00%	0.81
Ionic	14.37	0.00	0.00%	1.45
The Future Fund	13.37	0.00	0.00%	1.13
Grizzle	13.27	0.00	0.00%	-2.02
Capital Link	12.95	0.00	-0.02%	-0.82
LAFFER TENGLER	11.29	0.00	0.00%	3.47
Morgan Dempsey	10.36	0.00	0.00%	-4.95
Build	8.71	0.00	0.00%	-8.61
RiverNorth	8.63	0.00	0.00%	-0.78
Nifty	8.05	0.00	0.01%	0.88
Democracy	7.52	0.00	0.00%	0.00
CoreValues Alpha	7.44	0.00	0.00%	0.00
Dynamic	7.10	0.00	0.00%	0.00
Altrius	6.78	0.00	0.00%	-0.33
Acruence	6.52	0.00	0.00%	-24.11
ETFB	6.38	0.00	0.00%	-0.47
MKAM	6.31	0.00	0.00%	0.27
Cullen	6.27	0.00	0.01%	5.06
Lyrical	6.04	0.00	0.00%	-0.75
Performance Trust	5.99	0.00	0.00%	6.00
IQ Funds	5.70	0.00	0.00%	0.00
VegTech	5.62	0.00	0.00%	0.00
Brendan Wood	5.52	0.00	0.00%	1.55
Armada ETF Advisors	5.47	0.00	0.00%	-0.94
Kurv	5.24	0.00	0.00%	1.67
Blue Horizon	5.01	0.00	0.00%	0.00
Honeytree	4.66	0.00	0.00%	1.44
ICE BofAML	4.50	0.00	0.00%	0.00
iMGP	4.06	0.00	0.00%	2.69
USCF	4.01	0.00	0.00%	0.00
Reverb ETF	4.01	0.00	0.00%	0.00
Horizon	3.56	0.00	0.01%	0.00
X-Square	3.40	0.00	0.00%	0.00
StockSnips	3.21	2.96	92.31%	3.21
Jacob	3.03	0.00	0.00%	0.00
Newday	2.85	0.00	0.00%	0.00
Hypatia Capital	2.78	0.00	0.00%	-0.56
KP Funds	2.65	0.00	-0.02%	0.00
Vest	2.52	0.00	0.00%	-2.47
Westwood	2.48	0.00	0.00%	2.50
CRIT	2.18	0.00	0.00%	-0.17
Arch Indices	2.09	0.00	0.00%	1.57
WHITEWOLF	1.97	0.00	0.00%	0.57
Akros	1.90	0.00	0.00%	0.23
Langar	1.84	0.00	0.00%	1.62
Kingsbarn	1.70	0.00	0.00%	-0.57
iREIT	1.46	0.00	0.00%	1.49
New Capital	1.10	0.00	0.00%	-0.78
KARB	0.87	0.00	0.00%	0.26
DriveWealth	0.76	0.00	0.00%	0.00
Cboe Vest	0.73	0.00	0.00%	0.62
Onefund	0.00	0.00	0.00%	0.00

 

ETF Issuer League Table

Welcome to the etf.com league table. On this page, you’ll find the U.S. ETF market through different lenses: brand and issuer. What’s the difference? The brand is what the ETF says on the tin. For example, "iShares" is the brand of issuer "BlackRock’s" ETFs. Because many issuers license their ETF infrastructure to third parties, we present the data in both ways. The identification of the correct brand and legal issuer is done by our key data provider, FactSet.

Issuer	AUM ($, mm)	Net Flows ($, mm)	% of AUM	YTD 2024 Net Flows($,M)
Blackrock	2,735,678.40	21.82	0.00%	45,759.40
Vanguard	2,516,291.78	1,911.24	0.08%	79,990.90
State Street Global Advisors	1,273,874.15	-1,043.74	-0.08%	-14,101.30
Invesco	504,791.94	740.96	0.15%	23,391.50
Charles Schwab	333,642.36	1.84	0.00%	5,431.53
AJM Ventures LLC	161,742.03	461.34	0.29%	5,034.29
JPMorgan Chase	148,793.24	41.25	0.03%	12,459.47
Dimensional Holdings	132,308.16	73.38	0.06%	10,750.46
VanEck	77,824.81	-428.38	-0.55%	4,989.23
WisdomTree	76,956.68	102.10	0.13%	2,147.87
ProShares	71,174.42	0.00	0.00%	-4,301.17
Fidelity	69,593.88	13.64	0.02%	13,357.88
Mirae Asset Global Investments Co., Ltd.	46,753.94	62.01	0.13%	2,717.12
Direxion	46,497.22	0.00	0.00%	5,424.66
Pacer Advisors	43,192.26	58.38	0.14%	6,545.09
American Century Investments	42,673.25	111.74	0.26%	4,820.28
Goldman Sachs	33,488.33	-30.33	-0.09%	-533.10
PIMCO	28,252.83	51.82	0.18%	2,592.08
The Capital Group Companies	25,377.95	0.00	0.00%	4,937.98
Northern Trust	20,878.25	-6.25	-0.03%	-610.60
DWS	20,866.76	-32.16	-0.15%	-61.84
Digital Currency Group, Inc.	20,845.77	-166.20	-0.80%	-16,177.57
Innovator	18,273.06	4.16	0.02%	253.21
Franklin Templeton	16,638.38	-4.28	-0.03%	1,300.01
ARK Investment Management LP	15,365.05	44.43	0.29%	40.90
Janus Henderson	15,249.47	35.39	0.23%	3,262.03
SS&C	12,530.78	9.50	0.08%	287.73
BMO	9,892.76	0.00	0.00%	225.51
Alpha Architect	9,121.94	0.81	0.01%	2,751.09
Nuveen Securities	8,928.34	3.54	0.04%	-121.42
Amplify Investments	8,883.07	-1.62	-0.02%	-484.98
Abrdn Plc	8,118.75	14.73	0.18%	159.32
CICC	7,835.48	0.05	0.00%	-145.23
Victory Capital Holdings, Inc.	7,583.94	-5.74	-0.08%	87.97
Prudential	7,157.70	-33.46	-0.47%	570.75
Toroso Investments	6,992.16	-15.33	-0.22%	1,792.04
John Hancock	6,477.25	0.00	0.00%	103.56
BNY Mellon	5,850.25	-1.55	-0.03%	283.57
The Hartford	4,615.56	3.31	0.07%	-222.14
1251 Capital Group Inc.	4,462.10	6.48	0.15%	392.91
New York Life	4,159.17	1.03	0.02%	-197.66
Simplify Asset Management Inc.	3,999.71	-0.02	0.00%	831.54
Principal	3,995.16	-1.88	-0.05%	146.29
Exchange Traded Concepts	3,945.66	-1.10	-0.03%	71.90
GraniteShares	3,720.78	-41.07	-1.10%	1,477.20
T. Rowe Price Group, Inc.	3,525.74	8.87	0.25%	839.94
US Commodity Funds	3,239.66	125.32	3.87%	-304.09
Bondbloxx Investment Management LLC	2,815.17	-2.51	-0.09%	313.86
Columbia Management Investment Advisers, LLC	2,739.77	3.04	0.11%	532.05
Equitable Holdings	2,643.53	9.76	0.37%	1,168.40
Sprott, Inc.	2,515.85	23.02	0.91%	53.09
Cambria	2,449.11	0.00	0.00%	232.22
Envestnet	2,408.83	0.00	0.00%	1,559.42
Main Management	2,301.80	-3.24	-0.14%	123.81
Bitwise Asset Management, Inc.	2,275.88	0.00	0.00%	1,762.95
Power Corporation of Canada	2,206.01	7.89	0.36%	258.93
Morgan Stanley	1,966.17	0.00	0.00%	855.66
Virtus Investment Partners	1,896.23	1.11	0.06%	297.82
Aptus Capital Advisors	1,870.75	0.00	0.00%	272.62
Distillate Capital	1,852.33	0.00	0.00%	182.52
Eagle Capital Management LLC	1,799.40	0.00	0.00%	20.96
AdvisorShares	1,772.75	0.00	0.00%	372.83
Volatility Shares LLC	1,751.67	30.61	1.75%	1,202.69
UBS	1,740.71	0.00	0.00%	-18.37
Neos Investments LLC	1,605.12	9.03	0.56%	771.23
ORIX	1,578.07	1.32	0.08%	230.30
The Motley Fool	1,533.41	0.00	0.00%	34.95
Inspire Impact Group LLC	1,494.44	0.00	0.00%	66.22
MM VAM LLC	1,466.44	0.00	0.00%	0.43
Defiance ETFs	1,426.72	-1.18	-0.08%	131.71
US Global Investors	1,340.85	17.68	1.32%	-489.58
SEI Investments	1,235.88	0.09	0.01%	1,074.52
Barclays Capital Inc.	1,228.99	-3.16	-0.26%	-41.31
Eurazeo SA	1,131.06	3.75	0.33%	261.45
Davis Advisers	1,117.10	0.00	0.00%	19.50
Doubleline ETF Holdings LP	1,110.08	0.00	0.00%	186.78
Focus Financial Partners	1,041.21	0.00	0.00%	19.05
Neuberger Berman	953.06	1.29	0.14%	156.47
Rational Advisors Inc.	871.63	0.00	0.00%	-77.81
Timothy Plan	852.95	0.00	0.00%	0.38
Roundhill Investments	773.10	0.00	0.00%	104.21
Howard Capital Management, Inc.	770.11	0.00	0.00%	48.58
Tuttle Tactical Management, LLC	760.42	-7.05	-0.93%	677.23
The TCW Group, Inc.	730.69	0.00	0.00%	-133.08
Day Hagan Asset Management	699.21	-3.73	-0.53%	-16.93
Valkyrie Investments, Inc.	698.10	0.00	0.00%	538.78
Angel Oak Cos. LLC	689.18	0.00	0.00%	368.48
Horizon Kinetics LLC	687.00	0.00	0.00%	-56.75
SR Partners LLC	666.02	1.25	0.19%	-34.31
Smith Capital Investors LLC	661.55	0.00	0.00%	541.46
Redwood Investment Management	565.57	0.00	0.00%	-233.90
Bahl & Gaynor, Inc.	563.17	0.00	0.00%	52.18
Sausalito Partners LLC	561.07	0.00	0.00%	22.22
Estate Counselors LLC	547.82	0.00	0.00%	17.56
Tortoise	524.77	0.00	0.00%	-83.74
Wahed Invest LLC	511.48	0.00	0.00%	86.53
Aptus Holdings LLC	473.08	0.00	0.00%	-30.54
Grantham, Mayo, Van Otterloo & Co. LLC	460.50	3.20	0.69%	398.66
Kingsview Partners LLC	442.17	0.25	0.06%	202.75
AmeriLife Group LLC	439.18	1.34	0.30%	45.11
CI Financial Corp.	422.61	2.77	0.65%	67.60
Oneascent Holdings LLC	415.75	0.00	0.00%	54.95
David Young & Sandra G. Glain Family Trust	400.42	0.00	0.00%	22.02
ClearShares LLC	392.72	0.00	0.00%	-14.31
Nationwide	385.69	-2.36	-0.61%	-47.57
Western & Southern Mutual Holding Co.	373.33	-4.03	-1.08%	53.22
Sun Life Financial	371.02	0.00	0.00%	56.01
Matthews International Capital Management	343.18	-1.27	-0.37%	-5.21
Vert Asset Management LLC	337.31	-0.17	-0.05%	13.55
CastleArk Management LLC	336.99	0.00	0.00%	-14.41
Liquid Strategies	325.07	-1.64	-0.50%	-64.21
Eldridge Industries LLC	320.95	0.00	0.00%	93.82
Truemark Group	299.48	0.00	0.00%	45.26
Teucrium	297.32	-1.87	-0.63%	-26.74
Cavalier16	287.48	0.00	0.00%	0.61
Natixis	282.76	0.00	0.00%	174.64
Lagan Holding Co. Trust	253.46	1.51	0.59%	127.10
PlanRock Wealth Management LLC	253.18	0.00	0.00%	125.24
Madison Investment Holdings	251.09	0.00	0.00%	-4.57
Swan Global Investments	244.92	0.00	0.00%	27.23
Stf Management LP	228.25	0.00	0.00%	2.23
Brandes Worldwide Holdings	225.87	1.77	0.79%	123.14
Retireful LLC	223.19	0.00	0.00%	-26.10
AGF	219.56	-2.77	-1.26%	-26.53
Cary Street Partners Financial LLC /VA/	211.57	0.00	0.00%	-4.70
Federated Hermes, Inc.	209.47	0.00	0.00%	80.38
Little Harbor Advisors	195.51	0.00	0.00%	-4.76
CornerCap Investment Counsel, Inc.	192.88	0.00	0.00%	1.26
Renaissance Capital	189.17	0.00	0.00%	-23.90
Summit Global LLC	188.51	1.14	0.60%	-34.42
WBI	187.32	-1.45	-0.77%	-9.17
Paralel Technologies LLC	185.32	0.00	0.00%	0.00
Syntax Advisors	178.49	0.00	0.00%	-9.21
REX Shares LLC	176.90	2.74	1.55%	156.61
Toews Corp.	161.41	0.00	0.00%	3.07
Core Alternative Capital	158.61	0.00	0.00%	-80.78
Thrivent Financial for Lutherans	150.94	-11.08	-7.34%	-22.34
Rayliant Investment Research	150.33	-0.08	-0.05%	26.88
The Greenwood Trust	149.94	0.00	0.00%	53.08
SRN Advisors	141.62	0.00	0.00%	-1.44
Inverdale Capital Management LLC	137.45	0.00	0.00%	16.33
Running Oak Capital LLC	136.46	0.00	0.00%	53.64
Humankind USA LLC	135.86	0.00	0.00%	0.02
Intangible Capital	134.46	0.00	0.00%	-2.13
Soundwatch Capital LLC	126.16	0.00	0.00%	1.91
Dawn Global Topco Ltd.	123.16	0.64	0.52%	55.06
Hennessy Advisors	115.90	0.00	0.00%	53.50
Community Capital Management, Inc.	115.30	-0.01	0.00%	0.04
Applied Finance Group	109.29	0.00	0.00%	27.36
Baird Financial Group	107.53	0.48	0.44%	1.75
Neil Azous Revocable Trust	101.61	0.00	0.00%	5.43
Pettee Investors	99.71	0.00	0.00%	9.89
IronHorse Holdings	99.10	-1.61	-1.62%	-5.56
First Pacific Advisors LP	95.27	1.40	1.47%	36.14
Beyond Investing	91.41	0.00	0.00%	3.36
First Manhattan Co.	91.23	0.00	0.00%	0.44
Subversive LLC	90.76	0.00	0.00%	68.44
The Leuthold Group LLC	84.25	0.00	0.00%	4.15
Q3 Asset Management Corp.	83.82	0.00	0.00%	10.55
EntrepreneurShares, LLC	83.22	0.00	0.00%	1.52
Ridgeline Research LLC	82.77	0.00	0.00%	-2.28
Absolute Investment Advisers LLC	81.61	0.00	0.00%	0.00
Convergence Investment Partners, LLC	80.07	0.82	1.02%	38.42
Alexis Investment Partners LLC	79.56	0.00	0.00%	2.64
Water Island Capital Partners LP	78.81	0.02	0.02%	7.43
Arrow Funds	78.67	0.00	0.00%	-1.47
Faith Investor Services, LLC	75.71	0.00	0.00%	15.56
OBP Capital LLC	74.56	0.00	0.00%	-4.69
Resolute Investment Managers, Inc.	71.32	0.00	0.00%	27.42
Cohanzick Management	70.70	0.00	0.00%	1.70
Truist	69.42	0.00	0.00%	2.26
Spear Advisors LLC	69.04	0.00	0.00%	51.38
IDX Advisors LLC	64.13	0.00	0.00%	14.52
Logan Capital Management Inc.	63.91	0.00	0.00%	-1.01
Alger Associates Inc	61.36	0.00	0.00%	7.60
GeaSphere LLC	60.29	0.00	0.00%	-2.97
Cambriar Holdings	57.06	0.00	0.00%	1.20
Miller Value Partners LLC	57.01	0.00	0.00%	16.30
Client First Investment Management LLC	55.92	0.00	0.00%	-1.66
ETFMG	55.74	0.00	0.00%	-15.11
Sammons Enterprises, Inc.	53.68	0.00	0.00%	0.00
Formidable Asset Management	53.46	0.00	0.00%	-3.68
Guinness Atkinson Asset Management	50.46	0.00	0.00%	-1.33
Infrastructure Capital Advisors	50.26	0.00	0.00%	-1.20
Goose Hollow Capital Management LLC	49.33	0.00	0.00%	-6.65
Thor Analytics LLC	48.42	-0.26	-0.55%	-3.38
Texas Capital Bancshares, Inc.	47.60	0.00	0.00%	24.28
Hull Investments LLC	44.39	0.00	0.00%	3.86
ETF Series Solutions	43.30	0.00	0.00%	-0.06
Impact Shares	42.99	0.00	0.01%	-2.76
Obra Capital, Inc.	40.53	0.00	0.00%	0.50
ShariaPortfolio, Inc.	40.30	0.00	0.00%	18.90
GAMCO Investors, Inc.	39.53	0.00	0.00%	4.13
Regan Capital, LLC	39.11	0.00	0.00%	37.64
Sound Capital Solutions LLC	38.22	5.15	13.46%	38.70
Sovereign's Capital Management LLC	36.87	0.00	0.00%	7.63
ProcureAM	34.42	0.00	0.00%	-2.49
Calamos Family Partners	33.39	0.00	0.00%	14.17
Reflection Asset Management, LLC	32.90	0.00	0.00%	2.36
Sheaff Brock Capital Management LLC	31.85	0.00	0.00%	-0.48
AlphaMark Advisors	31.43	0.00	0.00%	1.47
Cultivar Capital, Inc.	30.36	0.00	0.00%	0.00
Counterpoint Mutual Funds LLC	29.64	0.00	0.00%	13.45
ETP Holdings	26.94	0.00	0.00%	19.10
Ot Advisors LLC	25.60	0.50	1.96%	25.55
R Cubed Global Capital LLC	25.13	0.00	0.00%	-5.20
WealthTrust Asset Management LLC	25.10	0.00	0.00%	6.11
Split Rock Private Trading & Wealth Management LLC	24.63	6.06	24.60%	24.69
Clough Capital Partners LLC	23.49	0.00	0.00%	6.96
PMV Capital LLC	22.91	0.00	0.01%	-1.33
Clockwise Capital LLC	22.29	0.00	0.00%	3.08
Point Bridge Capital	21.13	0.00	0.00%	0.00
Alternative Access Funds LLC	20.00	0.00	0.00%	7.50
Mairs & Power, Inc.	19.61	0.00	0.00%	1.56
Grant/GrossMendelsohn LLC	18.98	0.00	0.00%	4.01
Macquarie Group Ltd	15.65	0.00	0.00%	0.00
Future Fund Advisors	13.37	0.00	0.00%	1.13
Build Asset Management LLC	8.71	0.00	0.00%	-8.61
Democracy Investment Management LLC	7.52	0.00	0.00%	0.00
Power Financial Corp.	7.49	0.00	0.00%	0.00
Dynamic Shares LLC	7.10	0.00	0.00%	0.00
Cullen Capital Management LLC	6.27	0.00	0.01%	5.06
Lyrical Asset Management GP	6.04	0.00	0.00%	-0.75
Public Trust Advisors LLC	5.99	0.00	0.00%	6.00
VegTech LLC	5.62	0.00	0.00%	0.00
Kurv Investment Management LLC	5.24	0.00	0.00%	1.67
Distribution Cognizant LLC	4.01	0.00	0.00%	0.00
X-Square Capital	3.40	0.00	0.00%	0.00
Cboe Vest Financial LLC	3.25	0.00	0.00%	-1.85
Jacob Asset Management of New York LLC	3.03	0.00	0.00%	0.00
Hypatia Capital Group LLC	2.78	0.00	0.00%	-0.56
Westwood Holdings Group, Inc.	2.48	0.00	0.00%	2.50
Arch Indices Investment Advisors LLC	2.09	0.00	0.00%	1.57
Langar Investment Management LLC	1.84	0.00	0.00%	1.62
Kingsbarn Capital Management LLC	1.70	0.00	0.00%	-0.57
Carbon Collective Investing LLC	1.00	0.00	0.00%	1.00
DriveWealth LLC	0.76	0.00	0.00%	0.00
Milliman, Inc.	0.00	0.00	0.00%	0.00
ONEFUND LLC	0.00	0.00	0.00%	0.00

 

Disclaimer: All data as of 6 a.m. Eastern time the date the article is published. Data is believed to be accurate; however, transient market data is often subject to subsequent revision and correction by the exchanges.

---

22.

3 Top Artificial Intelligence (AI) ETFs That Are Hiding in Plain Sight

2024-04-15 08:43:00 by Daniel Foelber, The Motley Fool from Motley Fool

Picking top artificial intelligence (AI) stocks has been top of mind for growth investors. And while debates about Nvidia versus Advanced Micro Devices, or Intel over Qualcomm, or Amazon compared to Microsoft are certainly worth having, there's a far simpler way to invest in AI: exchange-traded funds (ETFs).

The Technology Select Sector SPDR ETF (NYSEMKT: XLK), Invesco QQQ ETF (NASDAQ: QQQ), and the iShares Semiconductor ETF (NASDAQ: SOXX) are all worthy foundational holdings for unlocking baseline exposure to AI stocks. Here's a breakdown of each ETF to help you determine which is best for you.

The perfect ETF for letting winners run

With $65.4 billion in net assets, the Technology Select Sector SPDR is one of the most common, simplest, and least expensive ways to invest in the tech sector.

As of April 4, 40.1% of the fund was in software companies; 26.7% was in semiconductor and semiconductor equipment companies; 21.2% in technology hardware, storage, and peripherals; 5.4% in IT services; 3.8% was allocated in communication equipment companies, and 2.9% in electronic equipment instruments and components companies.

However, a lot of the ETF is concentrated in just a few companies. Microsoft and Apple make up 42.8% of the entire fund, with Nvidia, Broadcom, and AMD dominating the semiconductor allocation with 11.9% of the fund's total weighting.

The Technology Select Sector SPDR Fund is a bet that today's top tech companies will also be the future leaders in AI. This has so far been a winning strategy because the tech leaders have the deep pockets, personnel, and innovation pipelines to make mistakes and capitalize on opportunities.

The fund is exposed to smaller, disruptive players taking market share from the current front-runners. It is also vulnerable to an overall valuation correction in the tech sector. The fund's 39.1 price-to-earnings (P/E) ratio is a considerable premium to the S&P 500's 28.3 P/E. However, the tech sector has a track record of growing into a lofty multiple.

With just a 0.09% expense ratio, the Technology Select Sector SPDR Fund stands out as a good choice for investors looking for widespread exposure to AI from leading tech companies rather than picking a single winner.

Expanding beyond tech

The Invesco QQQ ETF is massive, with $259.3 billion in net assets. It mirrors the performance of the Nasdaq 100, which consists of the 100 largest companies by market cap in the Nasdaq Composite.

There is some crossover with the Technology Select Sector SPDR Fund. But the key difference is that the Invesco QQQ isn't limited to the tech sector; it is also less top-heavy in just a few holdings.

For example, Microsoft and Apple are the highest-weighted stocks in this ETF -- just like the Technology Select Sector SPDR Fund. But their combined weighing is just 16.3% in the Invesco QQQ.

The Invesco QQQ has less exposure to the tech sector and less emphasis on the semiconductor industry, but it does have far more diversification. The Technology Select Sector SPDR Fund excludes companies like Amazon, Alphabet, Meta Platforms, Tesla, and others because they are in non-tech sectors like consumer discretionary and communications.

A downside of the Invesco QQQ is that it includes a lot of companies that have little to do with AI. The ninth-largest holding in the fund is Costco Wholesale. PepsiCo isn't far behind as the 12th largest.

This ETF isn't targeting a special theme; it is simply looking at the largest companies in the Nasdaq Composite no matter the industry. It's a good starting point if you are looking for diversification and a growth focus, but it might not be well suited for investors who are specifically targeting an AI financial product.

Investing in AI through the semiconductor industry

The iShares Semiconductor ETF is a good fit for investors who want to target AI investment specifically through the lens of chip stocks. The demand for computational power is on the rise due to the needs of complex AI models.

Nvidia is supplying processing power through its data center business. AMD is competing with Nvidia in the GPU market and is making CPUs for AI-enabled PCs.

Taiwan Semiconductor helps manufacture chips for top players like Nvidia, AMD, Broadcom, and Intel.

Broadcom makes networking chips that allow AI components to work together.

The advantage of the iShares Semiconductor ETF is that it is a direct way to invest in this need for more computing power from various markets. The ETF is surprisingly diversified. For example, Nvidia is the largest holding at 8.6%, but the top 10 holdings in the ETF make up 57.4%. With 30 total holdings, that means the bottom 20 make up 42.6% of the fund -- which is much more balanced compared to the other ETFs in this article.

The iShares ETF has a 0.35% expense ratio, so it's higher than 0.2% from the Invesco QQQ and 0.09% from the Technology Select Sector SPDR Fund. But if most of your AI interests are in the chip space, this ETF is one of the best options out there.

Using AI ETFs to your advantage

Each of these ETFs offers unique ways to invest in AI, but it's important to use ETFs in a way that fits your portfolio's allocation.

For example, if you are satisfied with your existing positions in Microsoft and Apple, then you probably wouldn't want to invest in the Technology Select Sector SPDR Fund since over 40 cents of every dollar invested goes into those two stocks.

Understanding the composition of an ETF can help you avoid accidentally overexposing your portfolio to a particular theme or company.

Perhaps the simplest reason to choose an ETF over an individual stock is because you aren't as familiar with the industry or don't have high conviction in one name over another. In that case, ETFs do an excellent job of giving you skin in the game through a passive approach.

Should you invest $1,000 in Select Sector SPDR Trust - The Technology Select Sector SPDR Fund right now?

Before you buy stock in Select Sector SPDR Trust - The Technology Select Sector SPDR Fund, consider this:

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Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $540,321!*

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See the 10 stocks »

*Stock Advisor returns as of April 8, 2024

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel Foelber has the following options: long July 2024 $180 calls on Advanced Micro Devices. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Nvidia, Qualcomm, Taiwan Semiconductor Manufacturing, Tesla, and iShares Trust-iShares Semiconductor ETF. The Motley Fool recommends Broadcom and Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

3 Top Artificial Intelligence (AI) ETFs That Are Hiding in Plain Sight was originally published by The Motley Fool

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23.

Earnings from more banks, Netflix, and retail sales: What to know this week

2024-04-14 13:00:04 by Josh Schafer from Yahoo Finance

Stocks slid over the past week as fears sticky inflation may prevent the Federal Reserve from cutting interest rates gripped markets. 

For the week, the Nasdaq (^IXIC) fell nearly 0.6% while the benchmark S&P 500 (^GSPC) slid more than 1.6%. The Dow Jones Industrial Average (^DJI) sank almost 2.5%, driven by a slump in bank stocks on Friday as quarterly earnings reports failed to impress investors.

More updates on the state of corporate America will greet investors in the week ahead. Results from Bank of America (BAC), Goldman Sachs (GS), and Morgan Stanley (MS) will round out earnings from big banks while reports from United Airlines (UAL) and Netflix (NFLX) also highlight the week.

In economic news, an update on retail sales in March is scheduled for Monday in what's expected to be an otherwise quiet week for economic data.

Rate cut hopes are fading 

Last week we noted continued stronger-than-expected data from the labor market had an increasing number of economists questioning if the Federal Reserve will cut interest rates in June. After another week of inflation data that showed price increases aren't declining as quickly as many hoped, many economists now see the Fed holding rates steady until at least the fall. 

The economics teams at Bank of America and Deutsche Bank, which had previously seen easing starting in the early summer, now believe the Fed will cut for the first time in December, meaning just one total cut for 2024.

"We no longer think policymakers will gain the confidence they need to start cutting in June," Bank of America US economist Michael Gapen wrote in a research note on Thursday. "We expect inflation to remain relatively firm in the near term. We are forecasting 0.25% m/m for core PCE in March and April. This will make a cut as early as June or September unlikely absent clear signs of labor market deterioration."

Consensus is now pricing in two interest rate cuts this year, per Bloomberg data. And Deutsche Bank chief US economist Matthew Luzzetti noted that even that more tempered outlook might not come to fruition in 2024. 

"Further disappointing inflation data or an election outcome that delivers fiscal stimulus and / or policies that could lift inflation (e.g., trade or immigration policies) would argue for no rate cuts this year and into 2025," Luzzetti wrote.

Consumer report card 

With consensus now seeing the Fed holding interest rates higher for longer, economists will continue to watch closely for any signs that the resilience in the US consumer is dwindling. 

A fresh reading on that trend is set to greet investors on Monday with the March retail sales report. Economists expect that retail sales increased 0.4% in March from the prior month. This would extend the rebound seen in February after retail sales sank 1.1% in January.

"We do not think consumer spending is poised to slow meaningfully, especially as wage growth remains solid," Wells Fargo's economics team wrote in a note to clients. "Real-time credit card spending data show consumer outlays remaining above their pre-pandemic trend in March."

Bank earnings show guidance 'risk'

The first set of earnings from some of America's largest financial institutions did little to impress investors. JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) all reported declining net interest income during their quarterly reports.

JPMorgan maintained its 2024 net interest income guidance of $90 billion, but analysts had expected guidance to increase in a range of $2-$3 billion, per CNBC.

"Markets have priced in a higher probability of the Goldilocks scenario playing out this year, introducing more downside risk to 'good but not good enough' news," Citi US equity strategist Scott Chronert wrote in a note to clients on Friday. "While very early, the first set of 1Q reports from the banks highlights this risk of guidance falling short of lofty implied growth expectations, even as the overall fundamental picture remains healthy." 

More banks, including Goldman Sachs, Bank of America, and Morgan Stanley, are expected to report earnings early next week as investors continue to track how higher interest rates are impacting the financial services sector. 

It's all about demand

Entering the first full week of quarterly updates for the first quarter, Wall Street strategists have their eyes on how specifically companies are driving earnings growth. 

Over the past year, many companies utilized layoffs and other tactics to keep margin growth intact while demand lagged. Strategists are looking for that narrative to change this quarter for the market rally to continue and earnings growth to support recent signs of an accelerating US economy. 

"You're kind of at the point of the cycle where you really need to start seeing revenue growth inflecting higher, and if you don't that's going to become more of an issue," Charles Schwab senior investment strategist Kevin Gordon told Yahoo Finance. "Companies that cut labor costs aggressively last year via layoffs, you can only do that for so long. Eventually you have to see actual demand come back into play."

S&P 500 revenue for the first quarter is expected grow 3.4%, below the 10-year average of 5.1%, per FactSet data.

Given the market's recent slump on fears inflation's downward path may have stalled and the Fed could cut rates less than expected, how this earnings season plays out will be increasingly "critical" for the market rally, according to BlackRock global chief investment strategist Wei Li.

"Earnings have come to the rescue because markets are up year to date, despite the hawkish repricing," Li told Yahoo Finance. "So we'll see if earnings will continue to come to the rescue of hawkish repricing, even as the bar has increased as well for earnings."

Reuters / Reuters

Monday

Economic data: Empire Manufacturing, April (-5 expected, -20.9 prior); Retail sales, month-over-month, March (+0.4% expected, +0.6% previously); Retail sales ex auto and gas month-over-month, March (+0.3% expected, +0.3% previously); NAHB housing market index, April (51 expected, 51 previously)

Earnings: Charles Schwab (SCHW), Goldman Sachs (GS)

Tuesday:

Economic data: Building permits month-over-month, March (-0.3% expected, 2.4% previously); Housing starts month-over-month, March (-2.7% expected, +10.7% previously); Industrial production, month-over-month, March (+0.4% expected, +0.1% prior) 

Earnings: Bank of America (BAC), BNY Mellon (BK), Interactive Brokers Group (IBKR), J.B. Hunt (JBHT), Johnson & Johnson (JNJ), Morgan Stanley (MS), PNC (PNC), United Airlines (UAL), United Health Group (UNH)

Wednesday

Economic data: MBA Mortgage Applications, week ending April 12 (+0.1% previously)

Earnings: Alcoa (AA), ASML (ASML), Abbott Labs (ABT), Citizens Financial Group (CFG), CSX (CSX), Discover Financial Services (DFS), Las Vegas Sands (LVS), Synovus (SNV), Travelers (TRV) 

Thursday

Economic data: Initial jobless claims, week ending April 13 (211,000 previously); Philadelphia Fed Business Outlook, April (0.0 expected, 3.2 previously); Leading Index, March (-0.1% expected, +0.1% previously); Existing home sales, month-over-month, March (-5.1% expected, 9.5% previously)

Earnings: Netflix (NFLX), Alaska Airlines (ALK), Ally Financial (ALLY), Blackstone (BX), D.R. Horton (DHI), KeyBank (KEY), PPG (PPG), Truist (TFC), TSMC (TSM), Union Pacific (UNP), Western Alliance (WAL), WD-40 (WDFC)

Friday

Economic data: No notable economic data. 

Earnings: American Express (AXP), Procter & Gamble (PG)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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24.

FOMC March Minutes Reflect Central Bank's Caution

2024-04-11 19:13:51 by Lucy Brewster from etf.com

A cautious U.S. central bank was concerned enough about recent upticks in inflation and mixed economic data that it would not commit to present or future cuts to the federal funds rate, according to minutes of the bank's Federal Open Market Committee's (FOMC) March meeting. 

FOMC, which typically meets eight times per year to discuss potential changes to monetary policy, left the rate unchanged at between 5% and 5.25%, where it's stood since last July after the last of a series of increases to the funds rate—the short-term interest rate commercial banks charge one another on borrowing and lending their excess reserves. 

"Members concurred that, in considering any adjustments to the target range for the federal funds rate, they would carefully assess incoming data, the evolving outlook and the balance of risks," according to the minutes, adding that "they did not expect...it would be appropriate to reduce the target range until they have gained greater confidence that inflation is moving sustainable toward its 2 percent" target.

The minutes' publication on Wednesday coincided with the release of the March Consumer Price Index, which increased an unexpectedly hot 0.4% month-over-month. Economists polled by Dow Jones had expected CPI to arrive at 0.3%. The CPI jump followed discouraging reports in January and February suggesting that 15 months of Fed monetary hawkishness in 2022 and 2023 had not done enough to tame inflation and sent stocks, including a number of major ETFs, swooning. 

Read More: The Best ETFs for Inflation in 2024

Markets were rebounding Thursday after an unexpectedly weak Producer Price Index (PPI) offered investors some hope that that price increases would not be so dire. 

The S&P 500 was up the better part of a percentage point in mid-Thursday trading, while the tech-heavy Nasdaq rose about 1.3%. The SPDR S&P 500 ETF Trust (SPY) and Vanguard S&P 500 (VOO) ETFs were both recently changing hands up about 0.7%. 

In the March meeting, Fed policymakers noted that despite increased interest rates, broad stock price indexes had "increased notably amid upbeat corporate earnings reports, particularly for the largest firms. The S&P 500 has hit several new highs in 2024. 

Rate Cuts Less Probable

Yet several Fed members concurred that economic data "had not increased their confidence" that higher CPI numbers this year were "statistical aberrations." And the minutes showed members' worries about the impact "that elevated inflation continued to harm households, particularly those least able to meet the higher costs of essentials like food, housing, and transportation."

The CME FedWatch tool is now predicting a less than 3% probability that the Fed will cut the funds rate at its next meeting in May, and just a 20% chance of a rate decrease in June. 

Read More: TLT Investors Have Been Hit Hard by Inflation Jumps. What’s Next?

Investors at the start of the year had expected rate decreases to begin in the first half of 2024 following a steady decline in inflation last year. 

Still, the Fed remains "confident that monetary policy remained well positioned to respond to evolving economic conditions and risks to the outlook, including the possibility of maintaining the current restrictive policy stance for longer should the disinflation process slow,” according to the minutes.  

Contact Lucy Brewster at lucy.brewster@etf.com.

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25.

Here’s What’s Happening in Markets Today: April 11

2024-04-11 17:58:15 by Kristin Myers from etf.com

Stock and bond markets were mixed Thursday morning as investors digested another inflation report. 

The Producer Price Index (PPI), a measure of wholesale inflation rose, 0.2% for the month of March according to the Labor Department. On a yearly basis, PPI rose 2.1%, the biggest jump since April of last year. Inflation came in weaker than economists had forecast, stoking hopes once again about the potential for rate cuts.

Mirroring the S&P 500 and the Dow, SPY, the SPDR S&P 500 ETF Trust and DIA, the SPDR Dow Jones Industrial Average ETF Trust took a leg lower, slipping a quarter of a percentage point and nearly half a percentage point respectively. QQQ, the tech-heavy Invesco QQQ Trust rose roughly 0.1% as the Nasdaq was also in the green early Thursday.

The weaker than anticipated PPI report comes just a day after the Consumer Price Index (CPI) rose 0.4% for the month, more than economists had originally forecast. Yesterday's report soured investor hopes and painted a picture of persistent and stubborn inflation. According to the CME Fed Watch Tool, traders now believe the Federal Reserve will hold rates steady through June's policy meeting, with a greater number of investors looking to July and September's meetings for a potential rate cut.

Treasury yields dropped after today's inflation report, and bond traders have been getting whiplash as many continue to question whether the Fed will cut rates at all this year. TLT, the iShares 20+ Year Treasury Bond ETF dropped more than half a percentage point after PPI data was released.

With high hopes that the Fed was on track to defeat inflation and cut rates, investors added nearly $25B to TLT last year. With TLT on a rollercoaster ride, investors could be rethinking that strategy. According to etf.com data, since the start of the year, TLT has lost close to $850M.

TLT YTD Flows

Across the pond, European markets sank after the European Central Bank (ECB) decided to hold rates steady. VGK, the Vanguard FTSE Europe ETF, IEUR, the iShares Core MSCI Europe ETF, and IEV, the iShares Europe ETF all dropped close to 1% on the news.

But for investors, European ETFs could prove to be a good buying opportunity after the ECB signaled that rate cuts could be on the way. In a release on Thursday the bank noted that with improving inflation outlook "it would be appropriate to reduce the current level of monetary policy restriction."

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26.

Here's How You Can Collect $50,000 in Dividends per Year in Retirement

2024-04-11 10:40:00 by David Jagielski, The Motley Fool from Motley Fool

Many people approaching retirement have fears about the state of their future finances. In a 2023 survey, the Nationwide Retirement Institute found that 75% of people aged 50 and over are concerned that Social Security benefits will run out at some point in their lives. And even if that doesn't worry you, there's the risk that you may not be generating enough income to live the kind of retirement that you want.

One way to alleviate those concerns is by investing for the long term and preparing for retirement ahead of time. By investing in stocks and relying on income-generating investments during your retirement years, you can be in a much stronger financial position. Below, I'll show you how you can generate $50,000 in annual dividend income by the time you retire.

Use exchange-traded funds to simplify your investing strategy

An ideal way to simplify your investing strategy and to help generate strong returns is to invest in an exchange-traded fund (ETF). By putting money every week or every month into an ETF, you don't have to worry about which stocks are good buys at the moment you decide to invest; you can simply put money into the same diversified ETF to eliminate the guesswork and analysis that can sometimes turn investors off from investing in stocks.

And there are many excellent ETFs to choose from. A popular one is the Invesco QQQ Trust (NASDAQ: QQQ). It holds the top 100 nonfinancial stocks in the Nasdaq, which means you'll have exposure to some of the best growth stocks in the world. Whether you want to invest in Microsoft, Amazon, Nvidia, or even Costco Wholesale, those stocks are all within this fund. And as new growth stocks arise and there are new top names, the ETF will update and reflect the best of the best; there's no need to constantly monitor stocks and valuations.

The Invesco QQQ Trust has made for an exceptional investment over the years. During the past decade, the fund has grown by more than 415%, which averages out to a compounded annual growth rate of 17.8%. That doesn't mean every year you'll achieve that type of return, but with some excellent growth stocks in the fund, you could outperform the S&P 500 index and its long-run yearly average return of 10%.

Investing early and often is the key

Even if you don't have a huge lump sum to invest in stocks today, investing early and often can be the key to generating a large balance. Suppose you could find a way to save $50 per week. Although it's not an easy task amid today's current economic conditions, a possible way could be through the combination of cutting some costs and picking up some extra work. Over the course of a year, an extra $50 per week would mean $2,600 per year in savings, which you could invest in the Invesco QQQ Trust.

Here's how those savings could grow, assuming you averaged a 15% annual return on your investment and invested $50 per week.

Year	Balance
1	$2,808.86
2	$6,071.58
3	$9,861.51
4	$14,263.82
5	$19,377.47
6	$25,317.41
7	$32,217.14
8	$40,231.75
9	$49,541.39
10	$60,355.32
11	$72,916.59
12	$87,507.56
13	$104,456.19
14	$124,143.43
15	$147,011.81
16	$173,575.33
17	$204,431.08
18	$240,272.61
19	$281,905.53
20	$330,265.64
21	$386,439.94
22	$451,691.08
23	$527,485.71
24	$615,527.50
25	$717,795.38
26	$836,588.05
27	$974,575.65
28	$1,134,859.75

Calculations by author.

After 28 years, you could have a balance of well over $1.1 million. Of course, depending on the actual returns, your portfolio balance will undoubtedly vary. Assuming you retire at age 65, that would mean you'd want to start deploying this strategy by age 37. But if you start later in life, you can also make up for that by trying to invest a bit more each week. The conclusion, however, remains the same: Investing as much as you can as often as you can will put you in a better financial position by the time you retire.

When in retirement, it's time to put that money into safer dividend stocks

Growth stocks are good investments when you want to build up your portfolio balance, but because of the risk and volatility that can be involved, they aren't necessarily optimal investments come retirement. When you're in your retirement years and need some more safety, it may be a good time to transition your portfolio into a high-yielding dividend fund.

A good option here is the SPDR Portfolio S&P 500 High Dividend ETF (NYSEMKT: SPYD). It yields around 4.5% and holds a variety of different stocks, including Citigroup, Ford Motor, and Iron Mountain. This broader mix of stocks offers higher payouts and greater diversification than what you'll get with the Invesco QQQ Trust. And if you've got a large portfolio totaling more than $1.1 million, your dividend income could come in around $50,000 per year.

By then, there could be other dividend-focused ETFs to choose from. But with an above-average yield and some great diversification, you can put all the gains you accumulated over the years to work into a dividend-focused ETF to maximize your income during retirement.

ETFs can help you build a diverse and safe investment plan

If you want dividend income or just a place to invest for the long haul, ETFs can help you accomplish your goals while also minimizing your overall risk. And having a go-to ETF to invest in can make your investing strategy much simpler and easier to deploy.

There are many other ETFs you could use for this strategy, but ultimately you can put yourself in the best position by targeting growth-oriented ETFs when you have a lot of investing years left, and putting that money into a dividend-focused ETF once you're in retirement and need more stability. By doing this, you can make your retirement years much more enjoyable as you potentially rake in a lot of money from dividends.

Should you invest $1,000 in Invesco QQQ Trust right now?

Before you buy stock in Invesco QQQ Trust, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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*Stock Advisor returns as of April 8, 2024

Citigroup is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Iron Mountain, Microsoft, and Nvidia. The Motley Fool recommends Nasdaq and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Here's How You Can Collect $50,000 in Dividends per Year in Retirement was originally published by The Motley Fool

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27.

Why the Fed risks relearning the painful inflation lessons of the 1970s

2024-04-11 10:00:29 by Jared Blikre from Yahoo Finance

This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:

• The chart of the day

• What we're watching

• What we're reading

• Economic data releases and earnings

A hotter-than-expected inflation print rocked bond markets Wednesday, sending the US 10-year Treasury note yield (^TNX) to 4.56%, the highest level since November. The jump (18 bps) was the biggest in nearly two years.

The resulting volatility leaked into equities — particularly the interest rate-sensitive areas of real estate, utilities, and regional banks — handing the Russell 2000 (^RUT) its worst trading day in eight weeks, down 2.5%.

Since December, the Fed has all but promised rate cuts are likely in 2024 based on the premise that price increases have moderated and are closing in on the Fed's 2% inflation target. 

Delving inside the inflation numbers, many components are clearly accelerating to the upside, including the Fed-touted "supercore" services number that excludes shelter-related prices. 

As Apollo Global Management chief economist Torsten Sløk noted to clients, the year-over-year change in supercore inflation is now running at 5%, while the three-month change has jumped to 8% — not far from its early 2022 peak, which was then a 40-year high. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)

The Fed aims to avoid repeating the double-inflation episode that rocked the 1970s and early 1980s. To this end, James Bullard penned an important missive about this bygone inflation era in 2022 (while president of the St. Louis Fed).

After price inflation spiked to 12% in 1974, the Arthur Burns-led Fed was quick to keep the policy rate relatively low, even as inflation rose again. 

"What followed was high and variable inflation over the next decade," as inflation would hold stubbornly over 5%. "[T]he real economy was volatile, in part because high inflation distorts price signals, which can hamper real economic activity."

In 1979, after price inflation poked above 10% again, Paul Volcker was installed as Fed chair to put the inflation genie back in the bottle for good.

But even Volcker got it wrong in his early days as Fed chair. Less than a year into his eight-year tenure, the fed funds rate stood north of 20% as CPI peaked at 15%. The Volcker Fed quickly lowered the policy rate to 9% over a few months — only to throttle it to 20% in 1980. 

From there, the Fed dropped it to 16%, but the central bank was again forced to raise its benchmark to 20% — the third time in just over a year.

Finally, by 1983, inflation had cooled to a manageable 2.5%. This time as it inflected upwards, the Volcker Fed was prepared.

"The 1983 [Federal Open Market Committee] focused more on monetary factors affecting inflation and consequently kept the policy rate relatively high, even as inflation declined," said Bullard.

And while the Fed kept its benchmark rate high relative to inflation, the US economy kept humming.

"One might have expected the high real interest rates to cause a recession, but that didn’t happen," said Bullard.

Higher for longer? History rhymes.

Read the latest news on inflation and what it means for the Federal Reserve:

• Inflation comes in hotter than expected in March

• Stocks sink as hot inflation torpedoes rate-cut hopes

• Higher gas prices helped drive hotter-than-expected inflation in March

• Another hot inflation reading fans fears Fed will push back rate cuts

• Why auto insurance costs are rising at the fastest rate in 47 years

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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28.

Here's What's Happening in Markets Today: April 10

2024-04-10 18:14:01 by Kristin Myers from etf.com

Markets are in the red to kick off Wednesday trading after the consumer price index (CPI), an important gauge of inflation, rose more than expected. 

According to the Bureau of Labor Statistics (BLS), CPI jumped 0.4% for the month of March over the previous month compared to the 0.3% rise economists polled by Dow Jones had originally forecast

The hotter-than-expected inflation figures sank investor hopes that a rate cut would be coming as soon as the Fed's June policy meeting. Market probability of a June rate cut plummeted to roughly 20%, according to the CME Fed Watch Tool, dropping from a more than 50% chance just last week.

As markets took a leg lower, index ETFs were also in the red. SPY, the SPDR S&P 500 ETF Trust dropped more than 1% while DIA, the SPDR Dow Jones Industrial Average ETF Trust sank 1.25%.

Treasury yields jumped after the inflation report, particularly on the 10-year, a popular benchmark for mortgages and other loans. TLT, the iShares 20+ Year Treasury Bond ETF, was down over 1% after market open as bond prices dropped. Yields and prices have an inverse relationship.

Bond ETFs have been on a rollercoaster ride this year as investors question whether the Fed will cut rates — and when.

TLT 1-MONTH TOTAL RETURN 

Currently the price of TLT is sitting at just over $91, close to the lows for the year.

The inflation report also hit real estate and technology equity prices. Higher rate environments keep real estate under pressure as mortgages and loans become more expensive, keeping buyers on the sidelines. VNQ, the Vanguard Real Estate ETF tumbled nearly 3.5% after the inflation report.

And for growth stocks like technology, higher interest rates take a bite out of future profits. While tech stocks have soared despite the higher rate environment over the past year, today's inflation report sent tech ETFs skidding. QQQ, the tech-heavy Invesco QQQ Trust slid nearly 1%.

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29.

3 Country ETFs That Are Beating QQQ

2024-04-10 12:00:00 by Rob Isbitts from etf.com

What do Irish stew, lasagna, and chaufa have to do with successful ETF investing for advisors? For starters, those Irish, Italian and Peruvian dishes make nice client dinners. 

For investors, there's more.

The ETFs that track their stock markets are ahead of the Invesco QQQ Trust ETF (QQQ) since the start of the 2022 bear market, and they are ahead of QQQ’s 7.5% gain year-to-date through last Friday. And in the case of two of the three, they have performed with lower volatility than QQQ, as measured by standard deviation. So, let’s flip to the next page of this ETF menu and get some details. 

Here's a surprise: QQQ has only had a total return including dividends of 12% from the start of 2022 through the end of last week. That’s a period of just over 27 months. 

If that seems impossible, given the exploits of FAANG stocks and the feeling of unbridled excitement about the U.S. stock market, especially big technology stocks, think again. Memories of the 33% drop in QQQ during 2022 faded quickly, and the so-called “recency effect” is very much in place today. For more than 23 of those 27 months, QQQ was under water, dating back to the market top that started the year in 2022.

Italy, Ireland ETFs That Beat QQQ 

So, it follows that it might be interesting to identify some ETFs that endured that period with more success, without taking on gigantic levels of risk. QQQ’s annualized standard deviation over the past three years is around 22%, a bit below its long-term average, as its mega cap leaders came to seen as a “flight to safety,” perhaps for the first time in Nasdaq Composite history. 

Now, let’s go global, and there we find that a trio of single-country ETFs have produced two to four times the return of QQQ since the start of 2022, with standard deviations in the same low to mid 20% range over the past three years. Here they are. 

The iShares MSCI Ireland ETF (EIRL) is up 24% since the first day of January 2022. This is a $120 million ETF that has been around since 2010. EIRL’s top 10 holdings make up 80% of the fund, which is not unusual for a single country ETF targeting a small nation. It’s largest holding—26%—is the parent company for FanDuel, the popular U.S. gaming business. 

Italy's stock market is represented by the $425 million iShares MSCI Italy ETF (EWI), which started way back in the last century, 1996. Since 2022, it too has handily outperformed QQQ, with a 23% gain. This 25 stock ETF yields 3.1%, has a trailing price-earnings ratio of 10.1x and has a weighted average market capitalization of $40 billion. So, its portfolio is packed with sizeable companies. 

Peruvian ETF Crushing QQQ 

And if you take the performance of EIRL and EWI and add them together, it still will not amount to the 49% return since the start of 2022 achieved by the $112 million iShares MSCI Peru & Global Exposure ETF (EPU). This 15-year-old ETF is not quite a pure play on the South American nation, as its portfolio allows it to hold non-Peruvian equities that have a large business presence in that country. That naturally includes some prominent copper mining stocks based in the U.S. and elsewhere. EPU yields 3.6% and sells at 15.4x trailing earnings.

As advisors determine whether the U.S. stock market is just starting a long-term re-emergence from the wreckage of 2022, or if this is beginning of the end of a nearly uninterrupted bull market cycle from 2009, it helps to realize that even in the best of times for U.S. markets and its economy, there’s a whole wide world of opportunity out there, for those advisors with the willingness to expand their scope. 

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30.

Earnings season to test breadth of stock market rally

2024-04-09 15:32:42 by Josh Schafer from Yahoo Finance

Stocks have surged across a variety of sectors to start the year. First quarter earnings season is about to put the breadth of the rally to the test. 

"We can always talk about price action and whether, you know, the rally is widening, but at the end of the day, it's about earnings and fundamentals," Deutsche Bank chief equity strategist Binky Chadha told Yahoo Finance.

First quarter earnings reports will kick off in earnest on Friday with JPMorgan (JPM) and other banks set to release results before the opening bell. Earnings from Delta Air Lines (DAL) will serve as an appetizer on Wednesday. 

Broadly, consensus sees earnings growing compared to the year prior for a third straight quarter. Consensus expectations are for a 3.2% year-over-year earnings increase for S&P 500 (^GSPC) companies in the first quarter, per FactSet data. 

Market bulls expect earnings and forward guidance for the rest of the year to show the outlook for corporates is improving despite a continued high interest rate environment. Bank of America US and Canada equity strategist Ohsung Kwon pointed out to Yahoo Finance Live that recent data on economic growth has surprised consensus to the upside, and that likely indicates "consensus might be too low, especially this earnings season."

"We're looking for another strong quarter [of earnings growth]," Kwon said. 

Still, the companies driving the overall earnings growth for the S&P 500 aren't expected to shift much this quarter. 

Research from Goldman Sachs' equity strategy team led by David Kostin shows the top 10 stocks in the S&P 500 — primarily the Magnificent Seven — are expected to see earnings grow by 32% in the first quarter. Meanwhile, the other 490 stocks are projected to produce an earnings decline of 4%.

Nvidia (NVDA) is the clear leader of the group, with earnings expected to grow 406% compared to the year prior, followed by Amazon's (AMZN) 175% expected growth. Meta (META), Eli Lily (LLY), Alphabet (GOOGL), Berkshire Hathaway (BRK-A, BRK-B), Microsoft (MSFT), Broadcom (AVGO), JPMorgan Chase (JPM), and Apple (AAPL) round out the rest of the top 10.

This leaves the overall earnings picture for the benchmark index levered to the index's largest corporations once again.‌

Kostin notes that if those companies continue to perform, the likelihood of an "acute catch down" — where stocks fall to reprice slower-than-expected earnings growth — is "relatively slim."

Instead, bullish investors are looking for a "catch-up" scenario in markets where the earnings for the other 490 companies in the S&P 500 start to rebound later in the year. While that trend won't be the clear driver of earnings growth this quarter, Chadha at Deutsche Bank believes there will be signs of a rotation under the surface in earnings growth, backing the recent market narrative that a growing US economy will be a tailwind for stocks outside the tech sector.

"With a cyclical uptake, with the pickup in CEO confidence that we've seen and talked about, you should start to see much better earnings," Chadha said. "You should start to see much better and more confident guidance."

To be clear, Chadha still sees "good earnings" for megacap growth and tech moving forward. But he believes the companies' guidance released this quarter will show some signs of a cooldown from the astronomical earnings growth seen by some large companies in 2023. 

If this is met by upbeat guidance from the other areas of the market, it would "continue to encourage" the rotation seen in markets over the past month with sectors like Energy (XLE), Materials (XLB), and Industrials (XLI) outpacing gains in Technology (XLK) and Communications Services (XLC). 

Charles Schwab global chief investment strategist Jeffrey Kleintop told Yahoo Finance Live that if first quarter earnings calls indicate a rotation may be underway, that'd be a welcome sign for the health of the stock market rally. 

He added that the recent pickup in manufacturing activity, which grew at its fastest pace in the US since 2022, shows analyst expectation for an earnings pickup in economic-sensitive sectors is more than "hope."

"It's a second wind for the stock market," Kleintop said.

zz/NDZ/STAR MAX/IPx

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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31.

If You Can Only Buy One Crypto in April, It Better Be One of These 3 Names

2024-04-08 19:53:23 by Matthew Farley from InvestorPlace

Navigating the world of crypto investments can be a daunting task. Almost every day there’s a new meme coin, dump and dump scheme, rug pull, as well as hundred or even thousand percent gains on these internet tokens. The issue though is that unless you are an insider, discovering the best cryptos to buy largely depends on luck. It can easily backfire and lead one being forced to hold a bag of worthless cryptocurrency.

For these reasons, the following cryptos to buy are considered to be the blue-chip options that investors can own with a feeling of relative security. These names are volatile enough, and with a sizable enough investment, one could conceivably double their investment due to market volatility.

So for those who don’t want excessive risk yet still desire a high upside, here are three cryptos to buy for April.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Bitcoin (BTC-USD)

Source: shutterstock.com/Unknown man

Bitcoin (BTC-USD) maximalists will state that BTC is all an investor ever needs. There could be some truth to that statement. In nearly fourteen days, the Bitcoin halving event will occur, reducing supply and potentially acting as a strong catalyst.

Meanwhile, the launch of Bitcoin spot ETFs has already seen substantial fund inflows. And, analysts predict further growth in 2024. Notably, inflows to these ETFs haven’t slowed down. So, this suggests that we’re still at the start of an early bull run.

Price predictions for 2024 vary widely. Some experts anticipate a price range between $60,000 to $500,000. This is driven by factors like the growth of Bitcoin ETF net assets and the April halving. Favorable macroeconomic conditions like lower interest rates also play a part.

I agree with the bulls on this one. My own thesis also suggests that tech stocks in general are overvalued. This means that trading inflows could rush to alternative assets such as Bitcoin where valuation metrics apply differently. For instance, the Invesco QQQ Trust Series 1 ETF (NASDAQ:QQQ) has a P/E ratio that’s around one standard deviation above its three-year average, which is a little pricey.

Ethereum (ETH-USD)

Source: shutterstock.com/BT Side

Independently of Bitcoin, Ethereum (ETH-USD) could develop a rally of its own, with the rising market acting as a strong catalyst.

The performance of Ethereum in 2023 saw nearly a 100% appreciation, albeit trailing behind Bitcoin’s over 150% gain. Anticipation around the approval of Bitcoin ETFs contributed to bullish trends. And, this suggests a similar potential hype for Ethereum ETFs.

Also, analysts are eyeing May for potential approval, noting Ethereum’s non-classification as a security by the SEC. And the existence of regulated ETH futures contracts are seen as positive indicators. Ethereum could reach or even exceed $5,000 by the end of 2024 if these developments materialize as expected. 

Finally, ETH is another one of those cryptos to buy as a good hedge against Bitcoin’s rising energy use. Bitcoin will need to continue rising in value to support its ecosystem of miners to maintain profitability. And this is relevant in the face of halving block rewards, mining difficulty and regulatory crackdowns and taxes on the mining industry.

Binance Coin (BNB-USD)

Source: Shutterstock

Binance Coin (BNB-USD) is perhaps one of the most successful cryptos to buy as a result of an Initial Coin Offering (ICO).

Despite its founders facing legal and regulatory scrutiny, BNB could be a great addition to one’s portfolio, given the BNB’s strength in its ecosystem. One of the few altcoins managing to carve out a very strong tokenomics model, it could increase in price in the future.

Also, it has plans in the works for greater utility for users. The objective includes enhancing performance, scalability and the development of decentralized applications (DApps) in areas like decentralized finance (DeFi), gaming, and artificial intelligence (AI). Notably, BNB Chain aims to expand its validator network from 40 to 100 and introduce “opBNB Connect” to improve scalability. 

Meanwhile, price projections suggest a potential increase, with estimates for 2024 ranging between a minimum of $510 and a maximum of $645. The forecast for the subsequent years also shows an upward trend. Predictions for 2025 stand at a minimum of $692 and a maximum of $840.

On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.

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The post If You Can Only Buy One Crypto in April, It Better Be One of These 3 Names appeared first on InvestorPlace.

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32.

Are Tech Stocks a Separate Asset Class?

2024-04-08 12:00:00 by Rob Isbitts from etf.com

Financial advisors know that technology stocks are different, especially those based in the U.S. Thanks largely to the massive success of the now-largest stocks in that sector, some of which emerged from the 1990s internet growth period, these household names in the economy dominate their respective markets as if they were monopolies. 

That is a situation not lost on members of the US Congress, where both sides of the aisle have done some saber rattling about one day regulating some of those advantages that build up after years of innovation and sheer size. 

Big tech stocks have reached the point where advisors have to think of them similar to playing a team in a sport where that opponent has an all-time great player on their squad. You have to know where they are on the field, court or ice at all times, or you risk suffering for losing track of them. 

Advisors who manage money for their clients may may suffer from lagging performance when mega cap tech leaves everything else in dust, as it did much of last year. This has happened so frequently, it begs the question: When setting asset allocation for clients, should big cap tech be separated from other equities, as if it were its own asset class? 

The concept might seem awkward to some, and sacrilegious to others. But when we look at performance patterns in recent years, a case can be made.

ETFs to the Rescue for Advisors, Again 

At the risk of sounding like a broken record, what advisors should understand, even if they don’t make their own investment decisions, is that ETFs have allowed them to communicate about market trends in a way that simply has not existed for most of the history of providing financial advice. 

Before ETFs, there were indexes, but the data was hard to come by, not detailed as it is today, and was expensive to access. None of that is the case today. So we can easily apply some performance analysis to large cap U.S. tech stocks and draw inferences about whether it should, indeed, be an asset class all by itself. 

The $65 billion Technology Select Sector SPDR ETF (XLK) is a market capitalization weighted fund holding all the tech stocks within the S&P 500. Since the start of 2019, it is up about 196%.

Based on the size of the iShares S&P 500 Ex-Technology ETF (SPXT)—a mere $53 million in assets—it is probably not common knowledge among advisors and investors that it is easy to even access a “tech-less” version of the S&P 500. And for most of the past decade, who would bother anyway? 

But with the possibility that tech goes from hero to goat at some point (with goat not meaning “greatest of all time” as it often does in contemporary lingo), that might be the ideal time to think of tech as different from the rest.

Tech and the Rest

That higher return for XLK versus SPXT has come with higher risk, based on the relative standard deviation of the two ETFs that together comprise the S&P 500. XLK has been more volatile by a significant margin, except during the outbreak of the pandemic in 2020 when everything went down together. Over the past 12 months, XLK has run about a 16% standard deviation, while SPXT has checked in at nearly 11%.

That gap has been as wide as ever the past few years, indicating that investors have been increasingly comfortable with viewing tech as its own style. That only feeds the argument for allocation between the two, XLK and SPXT, as something akin to a floating allocation between them. 

This is more an academic question for now, but the message is clear: Tech and everything else just don’t perform the same, most of the time. That provides an opportunity for advisors to explain the differences to clients, all part of helping them better understand where their performance comes from. 

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33.

Want to Get Your Portfolio to $1 Million by Retirement? Here's How Much You Should Invest Today.

2024-04-07 13:09:00 by David Jagielski, The Motley Fool from Motley Fool

Aiming for $1 million by retirement can be a great goal for investors. If you get your portfolio to that level, you'll have plenty of options as to how you want to enjoy your retirement.

You can invest in dividend stocks, which can help provide you with a recurring source of income during retirement. Or you could take a portion of the money out each year. Either way, accumulating that much will give you plenty of flexibility in how you want to live your life at that stage.

But how much do you need to invest today if you want to get to $1 million without having to take on too much risk?  I'll show you how much you would need to invest today based on your age and years until retirement remaining, and the expected annual growth rate of your portfolio.

Additional savings can make up for investing later on in life

Ideally everyone would invest a few thousand dollars in their teens into the next Amazon and be set for life. Unfortunately, that's not a realistic scenario for most people. Finding the next big growth stock can be extremely difficult, and setting aside that much money at a young age isn't a possibility for everyone.

But the good news is that even if you don't invest in your teens, or even your 20s or 30s, you can make up for investing later on in life by putting more money into stocks. If you put money into a growth-oriented exchange-traded fund (ETF), you could invest less than $100,000 even in your 40s and potentially still be on track to have $1 million by the time you retire.

How much should you aim to have in your portfolio right now?

If you want to grow your portfolio to $1 million, here's how much you'll want to target having today, assuming you retire at the age of 65.

Age	Years to Retirement	5% Growth	10% Growth	15% Growth
30	35	$181,290	$35,584	$7,509
35	30	$231,377	$57,309	$15,103
40	25	$295,303	$92,296	$30,378
45	20	$376,889	$148,644	$61,100
50	15	$481,017	$239,392	$122,894

Calculations by author.

There are multiple possible scenarios here. If you're an ultra-risk-averse investor who wants to keep risk as low as possible and invest only in the safest of stocks, you might want to look at the 5% growth column, where returns may be very modest over the long haul. The downside of this is that by sacrificing returns in exchange for safety, you'll need to have a lot more money invested today.

If you're just aiming to generate average market returns of around 10%, which is the S&P 500's long-run average, then the 10% growth column is where you'll want to focus on.

Lastly, if you're a growth-oriented investor looking to take on some risk in exchange for potentially market-beating returns of 15% in the long run, then the last column is where your focus should be. Keep in mind that you don't have to take on significant risk with this type of approach.

Investing in an ETF such as the Invesco QQQ Trust (NASDAQ: QQQ) can potentially help you here. The fund invests in the top 100 nonfinancial stocks on the Nasdaq. And over the past 10 years, it has generated returns of around 390%. That averages out to a compounded annual growth rate of 17.3%.

By investing in the top growth stocks on the Nasdaq, the fund can potentially deliver market-beating returns. While there may be some off years when it underperforms the market due to the volatility that comes with investing in growth-oriented stocks, this can be a suitable investment if you have a lot of investing years left, have time for stocks to recover from any downturns along the way, and don't think you'll need the money in the near future.

Don't have nearly enough today? Invest along the way

The table shows you how much you would need to invest today, assuming you put in a lump sum and do nothing else. But if you don't have enough money to invest that much right now, you can still add to your portfolio over the years.

Although inflation is making it more difficult than ever to save money, if you can put aside $50 per week, that could be $2,600 per year that you can add to your portfolio every year. The more you add to your portfolio, the greater your gains will be in the end.

Although it may seem discouraging if you aren't investing at an early age, you can still add funds along the way, and hopefully as your earnings grow. An ETF like the Invesco QQQ Trust can make it easy; rather than worrying about picking individual stocks, you can just aim to put money into that fund every month, every quarter, or every year. By doing that, you can set yourself up for a better future and more financially secure retirement.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

Want to Get Your Portfolio to $1 Million by Retirement? Here's How Much You Should Invest Today. was originally published by The Motley Fool

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34.

US economy has Wall Street 'borderline speechless' after blowout March jobs report

2024-04-05 17:54:09 by Josh Schafer from Yahoo Finance

The prevailing story of a strong US economy hasn't changed much in the past year as economic data has persistently topped Wall Street's expectations.

Friday's March jobs report was more of the same.

The economy added 303,000 jobs during the month, nearly 100,000 more than consensus expectations. The unemployment rate fell to 3.8%, hovering near a historically low level, while the percentage of Americans participating in the workforce increased. 

"The data leaves us borderline speechless," Jefferies US economist Tom Simons wrote in a note to clients on Friday. "We were optimistic about the payroll numbers coming into today based on recent trends in jobless claims and momentum from prior months, but we did not expect to see such strong data around the periphery and within the details."

It's the latest in a recent string of positive economic news. Earlier this week, data showed the manufacturing sector has entered expansion territory. Meanwhile, the hiring rate is at a steady pace seen prior to the pandemic and layoffs have held in a low range, signaling no sign of a slowdown in labor market activity. This comes as labor productivity is picking up for the first time in 15 years.

All of these incremental pieces have forecasters boosting their outlook for US economic growth for 2024. Consensus now sees quarter-over-quarter real economic growth coming in at 2% for the first three months of the year, up from the 1.8% projection seen in March. 

Supply and demand

A key factor in the robust economy has been a rise in the US population and, subsequently, an increase in available workers. According to the data released Friday, March labor force participation picked up to 62.7% from 62.5% in February. That rate stands just below the 62.8% reading seen just before the pandemic. This came as wage growth, a potential indicator of future inflationary pressures, decreased to 4.1%, its lowest level since June 2021.

This exemplifies an ideal scenario for the labor market, where job growth continues but not at the cost of higher inflation. 

BlackRock chief investment officer of global fixed income Rick Rieder reasoned the "positive" supply shock from increased immigration is helping create the current "pro-growth" yet disinflationary labor market dynamics.

The economics team at Goldman Sachs also recently referenced increased immigration when boosting their GDP forecast this year. On Friday, the team's chief US economist David Mericle wrote that this likely won't come at the cost of higher inflation.

"We expect the supply-side potential of the economy to continue growing somewhat faster than usual this year because elevated immigration is boosting labor force growth," Mericle wrote. "This means that strong demand growth shouldn’t worsen the economy’s supply-demand balance by much, if at all, because supply is nearly keeping up."

Fed Chair Jerome Powell recently acknowledged this could be a possible outcome for the economy this year and that further expansion of the labor market in and of itself isn't necessarily a concern for the Fed's fight against inflation.

"What we’re getting is a lot of supply and a lot of demand, and that supply is actually feeding demand because workers are getting paid and they’re spending," Powell said in a press conference on March 20. 

He added, "What you would have is potentially kind of what you had last year, which is a bigger economy where inflationary pressures are not increasing."

Still, strong economic growth has made investors wary of hoping for Federal Reserve interest cuts anytime soon. Investors are now placing a 54% chance the Fed cuts rates in June, down from a roughly 72% chance seen a month ago. 

The scaling back of Fed rate cut expectations has done little to shake stocks, though, as seen by Friday's rally across the three major indexes.

YUKI IWAMURA via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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35.

Jobs Report: Unemployment 3.8%, Rate-Sensitive ETFs Mixed

2024-04-05 17:00:00 by Kent Thune from etf.com

U.S. nonfarm payrolls jumped more than expected in March, cutting the unemployment rate while modest wage growth eased concerns about the Federal Reserve's response to inflation.

Payrolls swelled by 303,000 last month, according to a statement from the U.S. Labor Department. That handily beating the approximately 212,000 economists had expected, according to MarketWatch and was up from more than 270,000 in February. Average hourly earnings rose 0.3%, matching expectations, pushing the 12-month gain to 4.1%.

The unemployment rate ticked down to 3.8% from 3.9% and has remained below 4% for more than two years. Economists had expected the jobless rate to hold at 3.9%. The February jobs total was revised down from the 275,000 initially reported. 

Richmond Federal Reserve Bank President Thomas Barkin on Friday said the jobs report was "quite strong," referring to the unexpected increase in jobs added to the economy. "It's been 26 months in a row with unemployment below 4%. That's the first time that's happened since the late '60s," Barkin said an event in Maryland.

Sticky inflation readings have pushed out investors' hopes for interest rate cuts this year, and today's report adds to the so-called higher-for-longer narrative. On Friday, markets were pricing in a 55% chance the Fed will lower interest rates at its June meeting. 

As of midday trading, stocks were up 1% and the bond prices were down 1%, as measured by the SPDR S&P 500 ETF Trust (SPY) and the iShares 20+ Year Treasury Bond ETF (TLT), respectively.

What Is the Nonfarm Payroll Report? 

The monthly Bureau of Labor Statistics (BLS) nonfarm payroll report primarily focuses on the net number of jobs created in the private sector of the U.S. economy over the previous month. This excludes government employees, farmworkers, and private household workers. Beyond the headline number, the report provides a wealth of other data points like: 

• Unemployment rate: This indicates the percentage of the labor force that is actively seeking work but unemployed. 
• Average hourly earnings: This shows how wages are trending, offering insights into inflation and consumer spending power. 
• Job creation/losses by industry: This details which sectors are adding or losing jobs, valuable for investors in sector-specific ETFs. 

Why Does the Jobs Report Matter to ETF Investors?

The jobs report is a crucial data point for ETF investors for several reasons: 

Impact on Market Sentiment

Investors are watching for data that’s not disruptive of favorable or expected market conditions that could negatively impact their portfolio holdings. They may also be watching for buying opportunities. If there’s a surprise in the data, sentiment can shift and cause movements in ETFs’ and other securities’ prices. 

• Economic growth: A strong jobs report indicates a healthy economy, which can boost investor confidence and lead to rising stock prices. ETFs that track broad market indexes like the S&P 500, the Nasdaq 100, or the total stock market can benefit from this positive sentiment. But if the data is too strong, it may indicate an overheated economy. 
• Interest rates: The Federal Reserve closely monitors the jobs report to gauge inflation and economic health. A strong report might signal the need for the Fed to raise interest rates to curb inflation. Rising interest rates can lead to a pullback in prices for rate-sensitive funds, such as growth-oriented ETFs like the Invesco QQQ Trust (QQQ) and long-term bond ETFs like TLT, respectively.  

Industry-Specific Effects

• Sector performance: The jobs report provides a breakdown of job gains and losses across different sectors. This information can be valuable for investors holding sector-specific ETFs. For example, a strong jobs report in the construction sector might benefit infrastructure ETFs or construction and engineering ETFs. 
• Company performance: Ultimately, a strong job market can lead to increased consumer spending, which benefits companies that sell directly to consumers. Funds like the Consumer Discretionary Select Sector SPDR Fund (XLY), which holds companies like these, might see a rise in price. 

Bottom Line on the Jobs Report and ETFs

ETF investors can use the jobs report alongside other economic data to make informed investment decisions, but each report can have various interpretations. For example, a strong jobs report might favor broad market ETFs or sector-specific options tied to industries benefiting from a growing economy, but it may also indicate higher inflation, which can push down rate-sensitive funds. 

In contrast, a weak report might suggest considering defensive ETFs or those less sensitive to economic fluctuations, yet it may also signal lower inflation ahead, helping to push prices for rate-sensitive funds higher. 

Most importantly, investors should keep in mind that economic and market conditions are difficult to predict as these conditions can change directions in the short term, meaning that short-term swings in ETF prices should be expected and investors should invest in a way that is suitable for their risk tolerance and time horizon. 

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36.

Why the Fed is wading into uncharted waters: Morning Brief

2024-04-04 10:00:27 by Jared Blikre from Yahoo Finance

This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:

• The chart of the day

• What we're watching

• What we're reading

• Economic data releases and earnings

Wall Street is all but convinced the Federal Reserve will cut rates this year. 

Most sell-side desks are penciling in one 25-basis-point cut in June, with another two to three similar cuts by year-end. Fed Chair Jerome Powell has telegraphed rate cuts are coming since his pivot late last year. 

Even the bond market agrees, though that confidence is waning.

But recent hotter-than-expected data in the US is prompting questions of whether rate cuts are advisable for an economy that is finally coming off the inflation boil — and is even showing nascent signs of reacceleration in certain areas. 

Tuesday's release of the March ISM Manufacturing PMI is a good example. It was stronger than analysts estimated and, more importantly, topped 50 for the first time since late 2022. This indicates the manufacturing sector is in an expansion phase once again (though additional data points are needed to confirm).

Meanwhile, the unemployment rate sits well below the historical average at 3.9%, GDP is humming at 3.4%, and progress to bring inflation to heel remains slow and "bumpy."

Powell's big headache right now is an economy that reaccelerates, requiring further rate hikes. This is the so-called no landing scenario.

An economy that ran too hot and stayed there was the fate of Paul Volcker, who led the Fed in the late 1970s and early 1980s. Volcker presided over a "double-dip" recession as he tamped down inflation that at one point spiked to 15% annually. 

It would be supremely ironic if the same fate befell Powell, forcing another round of uncomfortable rate hikes — just as rate cuts are on the horizon.

Yahoo Finance crunched the numbers, and over the last 50 years, the Fed has presided over 22 rate-cutting cycles. Most were short-lived — especially during the period of high inflation in the US that persisted through the 1970s and 1980s. 

But what's clear from the chart is that the Fed didn't change directions nearly as often as during those inflationary decades. And inflation is only one of many factors that have changed in the intervening decades.

Volcker was a bit of a maverick who famously targeted the money supply as opposed to interest rates or the size of the Fed's balance sheet. And it wasn't until his successor Alan Greenspan that we even got an official monetary policy statement after each Fed meeting that said what the Fed intends to do.

Clearly, the Fed is a different animal than it was decades ago — as is the US economy — as is the world writ large.

It's tempting to read the Wall Street reports that can handicap rate cut odds to three decimal places and tell you where the S&P 500 will land on the final trading day of the year. 

But the safe bet is to remember that, at best, history only rhymes. And when it comes to the US economy, perhaps it's not "this time is different." Arguably, each time is different.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

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37.

From $50 to $50,000: 3 Stocks Under $100 That Could Skyrocket Your Wealth by 2026

2024-04-03 12:00:00 by Will Ashworth from InvestorPlace

InvestorPlace contributor Omor Ibne Ehsan recently recommended three stocks trading under $20, which investors could turn $100 in each of these into $10,000 by 2026. I will double down on that premise, suggesting three stocks under $100 to buy that will make you $50,000 by 2026. 

With a maximum total investment of $300 ($100 per stock), generating a compound annual growth rate of 450% is virtually impossible. It’s more the idea that these three stocks have the revenue and profit potential to deliver supersized returns. 

Where should one look for such stocks?

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

I’d look at holdings from ETFs focused on aggressive growth, such as the Invesco QQQ Trust Series 1 (NASDAQ:QQQ). Invesco QQQ Trust Series 1 tracks the performance of the Nasdaq-100 Index, a collection of 100 non-financial companies listed on Nasdaq. 

Here are my three choices for stocks under $100 to buy.

The Trade Desk (TTD)

Source: Tada Images / Shutterstock.com

The Trade Desk (NASDAQ:TTD) is one of the smaller names in the Nasdaq 100, with a market capitalization of $42.68 billion. Its share price, as I write this, is $88, well under the $100 mark. 

The digital advertising platform is the antithesis of Google and Facebook. It’s become so big that its market cap is almost identical to ad agencies Publicis Groupe (OTCMKTS:PUBGY) and Omnicom Group (NYSE:OMC). 

It focuses on companies that operate on the “open internet,” not the closed shop that is Google and Facebook. It places digital ads at scale for companies such as Spotify (NASDAQ:SPOT) in return for a 20% commission on those ads. 

However, compared to Google’s ad revenue, TTD is a blip on the radar.

“Global ad spending is approaching $1trn. Just $10bn of that, or 1%, went through ttd last year. Google’s revenues, mostly from digital ads, were a stonking $307bn,” The Economist’s March 27 edition of Schumpeter stated.  

There are risks associated with targeting streaming platforms and other subscription-type apps that rely on limited ads to grow revenues. The biggest risk being that a platform’s audience falls significantly, reducing the value of The Trade Desk’s service and commission rate. However, it’s a business model that appears to be working.

Over the last three years, its revenues have grown by 63% to $1.95 billion. During this time period its operating income has increased 61% to $200.5 million. 

It’s got a shot. 

Copart (CPRT)

Source: Gena Melendrez / Shutterstock.com

Copart (NASDAQ:CPRT) earns money from online vehicle auctions conducted in 11 countries including the U.S. and Canada.  It sells more than three million vehicles annually to customers in more than 190 countries. Its market cap is more than $13 billion higher than The Trade Desk. 

In March, Copart celebrated its 30th year as a public company. Since its IPO in March 1994, its shares have appreciated more than 36,000%.

Copart owns the real estate on which its facilities are operated, keeping it at the forefront of the online auction business, even when it might be cheaper to lease the land. 

“For example, at any given moment, it is “cheaper” to lease than to buy the facilities through which we serve our customers.” Co-CEOs Jay Adair and Jeff Liaw stated in Copart’s 2023 letter to shareholders.  

“We know, however, given how difficult it is to permit and develop new facilities, facility ownership is essential to ensuring the long-run sustainability of our service offerings.”

As a result, Copart has invested more than $2 billion over the past five years in buying and developing land. So, it’s not just in the online auction business; it’s also in real estate development, etc.

While it might not reach $50,000 by 2026, you’ll do very well over the long haul. 

CoStar Group (CSGP)

Source: Casimiro PT / Shutterstock.com

CoStar Group (NASDAQ:CSGP) is the smallest of the three, with a market cap of $39 billion. As I write this, its share price just squeeks in at $94.75. 

Its shares have delivered decent performance over the past five years, up nearly double, at a time when the commercial real estate business, especially the office segment, has suffered greatly from an increase in work-from-home and hybrid work arrangements. 

CoStar provides real estate data and data analytics to the industry. The recent settlement between the National Association of Realtors (NAR) and class-action plaintiffs should be good news for the company because residential real estate brokers won’t be required to go through the Multiple Listing Service (MLS) to list a home. 

The company has seen double-digit quarterly sales growth for three years, and recent good news should sustain this trend.

On March 25, RBC Capital Markets increased its target price on CSGP stock by 15% to $109. It maintains an outperform rating on the stock. RBC liked the news that the company’s Homes.com residential real estate platform saw a 29% week-over-week increase in premium agents — defined as the top 25% of agents — to approximately 5,276. 

With the changes in agent commissions related to the NAR settlement, CoStar is likely to gain more premium agents. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

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The post From $50 to $50,000: 3 Stocks Under $100 That Could Skyrocket Your Wealth by 2026 appeared first on InvestorPlace.

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38.

The 3 Best ETFs to Buy in April 2024

2024-04-02 18:53:35 by Marc Guberti from InvestorPlace

You don’t have to pick the best stocks to generate solid returns. Some investors pour their capital into ETFs that offer diversified portfolios. Fund managers monitor these portfolios, making adjustments to mirror benchmarks and potentially generating higher returns for shareholders.

ETFs have expense ratios that reduce your total returns, but most top ETFs keep these ratios low. You may end up with an ETF below 0.20%, but some funds have expense ratios closer to 1%.

Reviewing an ETF’s holdings and past performance can offer clues about how it may perform in the future. These are some of the top ETFs to buy in April, which can serve as good starting points for your research.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Vanguard Growth Index Fund ETF (VUG)

Source: C H A L N / Shutterstock.com

The Vanguard Growth Index Fund ETF (NYSEARCA:VUG) has more than 200 holdings with a strong concentration in the tech sector. This one sector makes up more than half of the fund’s total assets. Consumer Discretionary makes up 20% of the fund’s total portfolio, which doesn’t leave much room for other sectors.

The Magnificent Seven fill this fund’s list of Top 10 holdings. Microsoft (NASDAQ:MSFT) is the largest holding, making up 12.84% of the fund’s total assets. VUG has delivered steady returns for long-term investors. The stock has gained 38% over the past year and 115% over the past five years.

Vanguard funds are known for having low expense ratios, and VUG is no exception to the rule. The large growth fund only has a 0.04% expense ratio along with a 0.46% 30-day SEC yield. The fund prioritizes domestic growth stocks that have large market caps.

Invesco QQQ Trust Series 1 (QQQ)

Source: whiteMocca / Shutterstock

The Invesco QQQ Trust Series 1 (NASDAQ:QQQ) fund uses the Nasdaq 100 as its benchmark. The fund’s top 10 holdings are also filled with Magnificent Seven stocks. The stock is up by 39% over the past year and has rallied by 141% over the past five years.

The fund has generated 320% more returns than the S&P 500 since its 1999 launch. This stretch includes the dotcom bubble when QQQ lost more than 80% of its value from peak to trough. The fund has recovered marvelously since then.

QQQ has a generous 0.20% expense ratio and has options available for people who want to use covered calls to increase their income. In addition to the Magnificent Seven, Broadcom (NASDAQ:AVGO) and Costco (NASDAQ:COST) also made the fund’s list of top 10 holdings. Tech makes up more than half of the fund’s total assets.

iShares Semiconductor ETF (SOXX)

Source: Shutterstock

This fund has a higher expense ratio but has also delivered better returns. The iShares Semiconductor ETF (NASDAQ:SOXX) exposes investors to the semiconductor industry. Nvidia (NASDAQ:NVDA), Broadcom and Advanced Micro Devices (NASDAQ:AMD) are its top three holdings. These stocks make up over 23% of the fund’s total assets.

SOXX has a 0.35% expense ratio, which isn’t bad for an ETF up 55% over the past year. The stock has gained an even more impressive 243% over the past five years. The fund also has an annualized return of 24.47% over the past 10 years.

The stock’s performance has been solid, but it’s semiconductors or bust. Given recent shifts in the industry, it’s also artificial intelligence or bust. The ETF has many profitable companies that have opportunities to raise revenue and profit margins. However, you will have to buy an additional fund for more diversification so your portfolio doesn’t revolve around the semiconductor industry.

On this date of publication, Marc Guberti held a long position in VUG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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The post The 3 Best ETFs to Buy in April 2024 appeared first on InvestorPlace.

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39.

Is Invesco QQQ Trust a Buy?

2024-03-31 11:39:00 by Neil Patel, The Motley Fool from Motley Fool

Most investors like to follow the S&P 500, the Nasdaq Composite Index, or the Dow Jones Industrial Average. But there's another popular index that has crushed the performance of these three.

I'm talking about the Invesco QQQ Trust (NASDAQ: QQQ). In the last decade, including dividends, this top exchange-traded fund has soared an impressive 446%. This means that a $1,000 initial cash outlay back then would be worth almost $5,500 today.

Now that the Invesco QQQ Trust is near all-time highs, some investors might be thinking it's too late to get in. Is this ETF a buy right now?

Focus on tech and innovation

The Invesco QQQ Trust tracks the performance of the Nasdaq 100 Index, which contains the 100 largest nonfinancial companies listed on the Nasdaq exchange. The fund prides itself on giving investors access to businesses at the cutting edge of various technologies, like cloud computing, big data, and artificial intelligence.

Because these types of companies are growth-oriented, they have the potential to produce strong returns over time. That's certainly been the case here.

It shouldn't be a shock that the "Magnificent Seven" make up a sizable chunk of the Invesco QQQ Trust. Combined, Microsoft, Apple, Nvidia, Amazon, Meta Platforms, Alphabet, and Tesla represent a whopping 40% of the fund. The monster performance of these select stocks in the past decade has definitely propelled the Invesco QQQ Trust.

The price-to-earnings ratio of the average company in the Invesco QQQ Trust is 34.4. That's on the expensive side. However, I still believe it's smart to consider investing. Valuation doesn't matter as much if you have a long time horizon. For investors seeking the potential for higher returns, this is a good choice.

Other factors to keep in mind

The obvious reason to want to invest in the Invesco QQQ Trust is its remarkable track record of compounding investor capital. However, there are other factors that investors should think about.

For starters, all ETFs charge fees for providing these investment vehicles. In this case, the Invesco QQQ Trust's expense ratio is just 0.2%. Paying less annually means that investors keep more of their returns over time. That's a sweet deal.

What's very interesting is that in the last five years, Invesco QQQ Trust (total return of 158%) has even outperformed the Ark Innovation ETF (total return of 13%), a fund managed by Cathie Wood and her team. The latter focuses on the most disruptive businesses, but its expense ratio is 0.75%. It's clear which ETF has been the better choice for investors.

Picking individual stocks requires a meaningful commitment to analyzing financial statements, listening to earnings calls, and managing a portfolio. Even professional money managers aren't great at all that.

That's why going with a worthwhile option like the Invesco QQQ Trust is such a smart move. You don't need to put aside time to size up specific companies. And you don't need to be a financial expert. That's a huge advantage.

To supercharge returns, investors can fully automate a dollar-cost average strategy. Savings will be added to your Invesco QQQ Trust holdings regularly, helping build a healthy habit of consistent investing.

I'll also point out that while the Invesco QQQ Trust's historical returns are truly wonderful, investors must practice patience and have a long-term mindset. Because the ETF is tech-focused, volatility is typically higher than in more stable businesses. Just be prepared for the inevitable ups and downs along your investing journey.

Now sit back, relax, and let the Invesco QQQ Trust take your portfolio to new heights.

Should you invest $1,000 in Invesco QQQ Trust right now?

Before you buy stock in Invesco QQQ Trust, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of March 25, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Nasdaq and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Is Invesco QQQ Trust a Buy? was originally published by The Motley Fool

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40.

How to Turn $10,000 Into $1 Million by Retirement

2024-03-31 09:57:00 by David Jagielski, The Motley Fool from Motley Fool

Making money in the stock market doesn't have to be difficult or complicated. It can get that way, however, if you try to get too greedy or aggressive. If you're willing to stay the course and buy and hold investments that you're willing to be patient with, it's not impossible by any means to grow a $10,000 portfolio to $1 million or more by the time you retire.

Below, I'll show you how you can achieve that without even having to take on much risk, either, or worrying about which stocks to pick.

Why an exchange-traded fund makes the most sense for most investors

Investing can be intimidating because there are many stocks to choose from. Looking at tech giants like Amazon, Microsoft, and Apple, you might be thinking that it's hard to pick which one (or all) of those stocks you should buy. While you might want to own a dozen or more stocks in order to diversify, you may not have the time to track all those companies to see how they are doing and whether they are still good investments.

If you invest in an exchange-traded fund (ETF), you can get exposure to hundreds of different stocks -- even thousands -- through a single investment. This is why ETFs can drastically simplify your investing strategy. If you set up a goal to invest every month, you can put that money into the same ETF rather than going through a whole exercise every month of deciding which stock is the best buy at that precise moment.

One fund that should be near the top of all ETF buy lists is the Invesco QQQ Trust (NASDAQ: QQQ). It gives you exposure to the top 100 non-financial stocks on the Nasdaq. And the Nasdaq is where you want to be in the long run, because this exchange is where many of the best and brightest growth stocks end up. This includes Amazon, Microsoft, Apple, and many others. While you can invest in a broader-based S&P 500 index, the danger with diversifying too much is that you could end up sacrificing some gains for the added safety. And as long as you have an extended time horizon (e.g., 20-plus years), the Invesco QQQ Trust can be an excellent option.

How $10,000 can grow to $1 million

Over the past 10 years, the Invesco QQQ Trust has generated total returns (which include dividends) of 450%. That averages out to a compound annual growth rate of 18.6%. The S&P 500's long-term average is around 10%. By focusing on the Nasdaq's top 100 stocks, you have the potential to generate far superior returns in the long run.

Let's assume, however, that over a much longer period of 20- or 30-plus years, the return from the Invesco QQQ Trust decreases from 18.6% to 15%. After all, stocks have been a bit hot lately, and gains are likely to cool down in the future. Yet 15% is still an extraordinary return even for Nasdaq growth stocks. Here's a look at how a $10,000 investment could increase over the years, assuming a 15% annual growth rate.

Year	Investment Balance
10	$40,456
15	$81,371
20	$163,665
25	$329,190
30	$662,117
33	$1,006,998

Calculations by author.

Due to the effects of compounding, there's a huge advantage in keeping your money invested. Between years 10 and 20, the portfolio balance in this example rose by approximately $123,000. But between years 30 and 33, with a much bigger balance, it increased by nearly $345,000. The power of compounding is what makes investing in growth-focused ETF a worthwhile option.

Staying invested is the key

If you watch stock market news, much of the hype these days is about what the Fed will do with respect to interest rates, and what impact that will have on stocks. If you're a long-term investor, the huge advantage you have is you can ignore all that as nothing but noise and developments that will only have an impact on the short term.

In many cases, the best option is to keep things simple. Invest in what you know, and if you aren't comfortable with any particular stock, buy a top ETF like the Invesco QQQ Trust. That's a better, safer way of growing your wealth over the years than trying to keep up with the latest business news every day.

Should you invest $1,000 in Invesco QQQ Trust right now?

Before you buy stock in Invesco QQQ Trust, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of March 25, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, and Microsoft. The Motley Fool recommends Nasdaq and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

How to Turn $10,000 Into $1 Million by Retirement was originally published by The Motley Fool

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41.

Stocks just had their best first quarter in 5 years — here's where strategists think the market is headed

2024-03-30 11:37:42 by Josh Schafer from Yahoo Finance

Stocks ripped higher in the first three months of the year amid investor bets that the US economy remains on solid footing.

Now, the key debate on Wall Street entering the second quarter is whether the S&P 500 (^GSPC) has any more room to run after its best start to a year since 2019.

The market rally has broadened over the past few months, moving from a story of a few stocks driving the major averages higher to investors piling into sectors sensitive to economic shifts like Materials (XLB) and Industrials (XLI). The prevailing bet is that the US economy will continue to grow as inflation falls closer to the Fed's 2% goal, a so-called soft landing scenario.

But some think after five straight positive months for the S&P the market could be due for a pullback. 

"You've had this strong move ... in anticipation of, let's call it a Goldilocks or soft landing environment," said Citi US equity strategist Scott Chronert. "And so we think we have to expect a digestive period here to digest these gains and allow some time for the fundamentals to grow into the price action."

Chronert holds a 5,100 call on the S&P 500 and hasn't shifted that forecast higher as his team waits for more confirmation that economic growth remains resilient and earnings will come in better than currently priced into the market.

The equity strategy team at Goldman Sachs sits in a similar position, maintaining a 5,200 year-end target for the S&P 500. But given stocks' surge past their current target, the team recently explored four other scenarios for the benchmark in a research note.

The two downside cases explore similar topics to those often referenced by the persistent bears on the Street. One is where the market's expectations for earnings in large-cap tech are too optimistic, and that brings down the whole market. The other is that the Federal Reserve's battle against inflation leads to a higher-for-longer interest rate strategy that eventually stunts economic growth and spawns recession.

Both negative scenarios would lead to the S&P 500 hitting 4,500, per Goldman's estimates. And some on Wall Street believe that downside scenario is the most likely outcome. 

That group is wary of recent bumpy inflation readings and how those could shift the expectation for Fed interest rate cuts later this year.

"We believe that there is a risk of the narrative turning back from Goldilocks towards something like 1970s stagflation, with significant implications for asset allocation," JPMorgan chief market strategist Marko Kolanovic wrote in a note to clients on Feb. 21. He's maintained a call for the S&P 500 to fall to 4,200 by the end of the year.

Upside risks 

The other two cases Goldman examined see at least 10% upside in the benchmark average. One would be driven by further outperformance from Big Tech, which would see already elevated valuations in that sector balloon further as AI hype drives further gains. The other is a continued broadening of the market rally, with an increase in earnings from the rest of the S&P 500 outside of megacap tech and a robust economic outlook supporting a rally in stocks not just related to the AI trade.

Largely, this would be an extension of the current leg of the rally, which saw Energy (XLE) and Materials lead the sector action in March.

"We remain pretty constructive," Goldman equity strategist Ben Snider said. "And we're advising investors to stay invested in the US equity market, precisely because we do think those upside risks outweigh the downside risks and we think the economy looks very healthy. Recession looks unlikely."

Reuters / Reuters

Others on Wall Street share Snider and Goldman's sentiment. Since Deutsche Bank's economics team dropped its recession call in early February, the firm's chief global strategist Binky Chadha has noted the equity strategy team feels more confident in its bull case for the S&P 500 this year, which sits at 5,500, about 5% upside from current levels.

Deutsche Bank research shows the rally in stocks has brought $260 billion into the equity market since May. But these flows have been "in line with macro data," said Chadha, pointing to the shift from consensus expecting a recession to the current outlook for positive economic growth and earnings moving higher. 

Deutsche Bank also says the current risk appetite in the market sits significantly below levels seen in prior rallies that fell off a cliff, like the 2021 meme stock craze.

"It's not [at] a level where you could expect that because positioning is so stressed that there could just be an unwind in the middle of the night for no reason just because people are so long," Chadha said. 

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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42.

This Troubling Indicator Hasn't Been This High Since 2009, and That Could Spell Trouble for Investors

2024-03-30 05:00:00 by David Jagielski, The Motley Fool from Motley Fool

If there's one thing that may slow down the stock market this year, it's a recession. While low interest rates may be good for growth stocks, a lack of economic growth isn't good for any business. Although consumers and businesses have been showing resiliency amid inflation and higher interest rates, that doesn't mean this resilience will last forever.

The economy is still growing, but there may be trouble ahead. One indicator suggests that things haven't been this bad since the Great Recession. Let's see what this could mean for investors.

Corporate defaults haven't been this high since 2009

A report from the S&P covering the first two months of the year says that there have been 29 corporate defaults in 2024. The last time there were that many defaults at this stage of the year was in 2009, when there were 36. Some economists aren't surprised, however, noting that higher rates are putting more pressure on businesses with high debt loads.

Included within that tally are eight defaults in Europe, which is more than double what was reported last year at this stage. And with rate cuts not imminent and interest rates potentially staying higher for longer, the risk is that the number of corporate defaults may continue rising at an alarming rate for a while.

A correction in the market could be coming

The near-term risk for investors is that with many stocks soaring to sky-high valuations, a correction could be overdue for many stocks. Right now, companies are still generating strong growth and sales are increasing, but if businesses are struggling and the economy falls into a recession, that could come to a grinding halt.

The danger is that as those growth rates slow down significantly, investors may start to think twice about some of the valuations that growth stocks are trading at. In the short term, at least, a recession could put stocks under significant downward pressure, and the markets as a whole could give back some of the impressive gains they've generated over the past year and a half.

Investors are still better off in stocks

What the past few years have undoubtedly taught investors is that the economy -- and the stock market -- can be completely unpredictable. Trying to forecast whether there will be a recession this year or whether rate cuts will happen is next to impossible. Billionaire investor Warren Buffett has made a fortune out of stock picking, and he places no importance on economic projections when choosing which stocks to buy. Instead, he focuses on investing in quality businesses.

By trying to time the market and sell stocks at a time when you might expect a slowdown, you could miss out on profits. A good alternative for investors may be to simply move money out of expensive, high-priced stocks and into a balanced exchange-traded fund (ETF). One such option is the Invesco QQQ Trust (NASDAQ: QQQ), which gives investors exposure to the top 100 non-financial stocks on the Nasdaq exchange.

While you would still have exposure to stocks such as Microsoft, Nvidia, and Meta Platforms in that ETF, because of the diversification the fund offers, it makes for a more balanced investment than holding each one of those stocks all on their own. And with an expense ratio of just 0.2%, the ETF's costs won't eat up much of your returns.

Over the past decade, the Invesco QQQ Trust has achieved total returns (including dividends) of 450%, which is far higher than the 240% gains the S&P 500 has generated during that stretch. If you're worried about individual high-priced stocks, investing in the Invesco QQQ Trust or other ETFs can be a way to help minimize your overall risk while still remaining invested in the market.

Should you invest $1,000 in Invesco QQQ Trust right now?

Before you buy stock in Invesco QQQ Trust, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of March 25, 2024

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Nasdaq and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

This Troubling Indicator Hasn't Been This High Since 2009, and That Could Spell Trouble for Investors was originally published by The Motley Fool

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43.

SPDR's GLD Had $363M in Outflows: ETF Fund Flows as of March 27, 2024

2024-03-27 21:04:08 by etf.com Staff from etf.com

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44.

The S&P 500 is up 5 months straight — and history favors momentum

2024-03-27 10:00:25 by Jared Blikre from Yahoo Finance

This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:

• The chart of the day

• What we're watching

• What we're reading

• Economic data releases and earnings

Since October, stocks have climbed the wall of worry and closed each month in the green — brushing aside concerns over inflation, recession, corporate earnings, Fed hiking, Fed easing, and the like. Barring disaster, Friday's settlement will extend this winning streak to five months.

Over this brief period, the S&P 500 has rocketed 25% higher, leading reasonable investors to question if the market has moved too far too quickly.

History answers resoundingly once again for those who would question the trending potential of the US stock market: Strength begets strength.

Since 1950, there have been 30 five-month streaks in the S&P 500, including the most recent one, along with another streak that ended last July. In all but two of the prior 28 cases, the S&P 500 was higher 12 months later, with an average gain of 12.5% and a 93% win rate. This compares to a 9.0% average one-year return with a 74% win rate.

The bullish advantage decreases over shorter time frames, but critically, it doesn't disappear. 

Looking one month out following a five-month streak, the average historical return is 1.0% with a 76% win rate — versus a 0.7% average gain and 61% win rate over all one-month periods in the last 74 years.

And, as we've been writing, gains are increasingly broad-based, with the rally extending beyond anything tangentially related to artificial intelligence.

Investors might be surprised to learn that over the last five months, the financial sector is the best-performing large-cap sector, up 28%. 

Tech is close behind with a 27% return, followed closely by industrials, up 26%. Notwithstanding the barrage of AI headlines, large-cap industrials have notched 27 record closing highs over the last five months versus tech's 25 all-time records. 

Throw in the materials, communications, and consumer discretionary sectors, and fully six of the 11 S&P 500 sectors are up 20% or more over five months.

Our large-cap discussion here doesn't even touch on the risk-on tilt being felt elsewhere in the markets — from crypto to disruption stocks to IPOs. 

Less than one week after its initial public offering, Reddit (RDDT) has nearly doubled in price — up 91.5%. That's not nothing either.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

---

45.

Reddit ignites meme stock resurgence, further signs of 'bull market in everything'

2024-03-26 18:57:16 by Josh Schafer from Yahoo Finance

Reddit became synonymous with the meme stock rally of 2021. Now, its stock has become a meme itself.

Reddit stock (RDDT) popped more than 12% on Tuesday and has rallied more than 30% since its initial public offering last Thursday. Some reports have pegged an uptick in options volume to the recent surge in shares. 

The meme resurgence spans beyond one popular IPO. GameStop (GME), the original meme stock, just had its best one-day rise in a year. The Donald Trump-tied media SPAC finally debuted under the name Trump Media and Technology Group and ticker symbol DJT. That stock was up more than 50% during Tuesday's trading session alone. 

"We are in a very exuberant market," Interactive Brokers chief strategist Steve Sosnick told Yahoo Finance. "We're in a very momentum-driven market. One of the hallmarks of momentum is it becomes far less about fundamentals. It becomes all about price movement and much less about about valuation. Meme stocks are the epitome of that."

Beyond those popular names, other signs of a risk-on market are flashing too. 

Bitcoin (BTC-USD) has pressed near $71,000 per coin. MicroStrategy (MSTR), a stock that more closely follows the price of bitcoin than typical fundamental drivers like earnings, is now up more than 200% year to date after a massive rally on Monday. 

And the commodities trade is ripping too, with gold (GC=F) up 7% in the last month and sitting near an all-time high. The price of cocoa (CC=F) has risen nearly 50% over the same time period.

To Charles Schwab chief investment strategist Liz Ann Sonders, these moves are signs of "froth" in the market. 

"It's sort of the bull market in everything theme recently with the exception of maybe bonds," Sonders said. "It's in crypto, it's in precious metals, it's in certain other commodities. It's in some of the meme stocks, again, and it is [all part] of the mix."

REUTERS / Reuters

The big moves come as the broader market sits at all-time highs. The S&P 500 (^GSPC) has hit 20 all-time highs in less than three months of trading this year, putting it on pace for the most record closes in any year ever. The "straight up and to the right" nature of the benchmark's rise over the last several months — it hasn't produced a negative month since October 2023 — has had many asking if we're in a stock market bubble that's about to pop.

Many strategists have argued the answer is no. 

In a research note on Monday, Deutsche Bank's equity strategy team reasoned that the $260 billion that's poured into equities since last May doesn't indicate a peak in risk appetite. Instead, it's been supported by an improving outlook for both the economy and earnings.

Deutsche Bank director of global asset allocation and US equity strategy Parag Thatte told Yahoo Finance the firm hasn't seen flows data pick up purely because of risk appetite yet.

"If flows or positioning were to get to an extreme, it becomes an issue by itself, because people could get nervous holding extended positions when we're at an extreme," Thatte said.

"But because we're not yet at those levels, what we would say is that you will need some sort of a negative catalyst in order for people to pull positions back."

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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46.

Forget the Nasdaq -- Invest in This Unstoppable ETF Instead

2024-03-26 06:00:00 by Justin Pope, The Motley Fool from Motley Fool

The technology-heavy Nasdaq Composite index has been on a remarkable tear over the past decade, outperforming the S&P 500 by a wide margin. But one popular exchange-traded fund (ETF) has done even better: the Invesco QQQ Trust (NASDAQ: QQQ).

No, don't write off the Nasdaq. That said, the QQQ could still be the better buy. It has been unstoppable over the past decade, appreciating by 400% and never falling further than 36% from its high. Will that continue in the years ahead?

Riding the "Magnificent Seven" to big gains

Exchange-traded funds are collections of stocks that trade under one ticker symbol. This makes them an easy way for investors to diversify their portfolios. The Invesco QQQ Trust holds shares of 101 companies in its portfolio.

However, it is often the case that a small group of relative outliers has the most impact on a system's performance. That's true here. The Invesco QQQ Trust's portfolio is weighted heavily toward the "Magnificent Seven" stocks. All sit among its top 10 holdings, and they collectively account for roughly 40% of the fund's value.

That's not necessarily a bad thing. The Magnificent Seven are among the largest, most deep-pocketed U.S. technology companies, and have firm footings in some of the hottest growth sectors, such as cloud computing, digital advertising, and artificial intelligence (AI).

Will the fund's hot performance continue?

Nobody can predict with any certainty what the market or specific stock prices will do. However, the Federal Reserve recently indicated that it still plans to reduce the benchmark federal funds rate later this year.

Whether it does so, when, and by how much will depend largely on how inflation trends over the coming months and what the macroeconomic picture looks like, but those rate cuts could be a positive for technology stocks, which tend to thrive in lower-rate environments. (Just look at what happened to their share prices when rates were too low in 2021.)

Additionally, AI has become a central growth trend in the tech sector that could drive years of investment and expansion in data centers, software, and other industries where the Invesco QQQ Trust's largest holdings operate. Check out long-term earnings growth estimates for the fund's top 10 holdings.

Analysts are least optimistic about Apple and Costco Wholesale, but even they are still expected to deliver over 9% annualized earnings growth. Predictions for all the others are in the mid-teens percentages or higher. In other words, the combination of a friendly interest rate policy and earnings growth could mean the fund's holdings (and the fund itself) will perform well for years.

How to invest in the Invesco QQQ Trust today

The Invesco QQQ Trust has proven fairly steady over the years. Many individual stocks have fallen far further than 36% from their highs. Still, you can't take that for granted; investors must be prepared for volatility, even if the long-term trends point to higher share prices.

Don't be impatient and buy all your Invesco QQQ Trust shares at once. Instead, consider adding to your position gradually through small, scheduled purchases -- a strategy called dollar-cost averaging. That's a way to build a position in an asset with a blended cost, ensuring that the cost basis of your investment won't be at the very top of the asset's medium-term range -- nor at the very bottom.

You'll be glad you didn't jump in with both feet on day one if the market gets volatile and offers up better buying opportunities later.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Forget the Nasdaq -- Invest in This Unstoppable ETF Instead was originally published by The Motley Fool

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47.

Equal-Weight RSP Boxing Out SPY, Mag 7

2024-03-20 16:00:00 by Jeff Benjamin from etf.com

While riding a handful of stocks that have been driving market indexes can be exhilarating, there is also a time for tapping the brakes, whether to reduce risk or diversify a portfolio. 

That’s the premise behind ETFs like the Invesco S&P 500 Equal Weight ETF (RSP), which has risen more than 3% over the past month. 

The fact that RSP has been running evenly with the market-capitalization-weighted SPDR S&P 500 ETF Trust (SPY) over the past 30 days has drawn the attention of both savvy market watchers and trigger-happy traders as a sign that the influence of the Magnificent Seven stocks is waning slightly.

“The broadening of market breadth may make financial advisors feel a bit more at ease,” said Nicholas Codola, senior portfolio manager at Omaha, Neb.-based Orion.

“Generally, it’s a sign of a stronger, more resilient market when the majority of the stock market returns are not explained by seven-to-10 names,” he added. “We’ve all heard the old adage that diversification is the only free lunch.”

RSP's Implications for Long-Term Investors

Indexes weighted to the largest and fastest growing companies have historically had a huge upside, as has been evident recently.

Last year, SPY’s 26.2% gain was nearly double the 13.7% gain by RSP. And so far this year that trend has continued with SPY up 8.2% and RSP up 4.5%.

But longer term, where most retail class investors live, RSP has been a powerful force.

Since its inception, 21 years ago, RSP has produced a cumulative return of 542%, which compares to a 458% cumulative return over the same period for SPY, according to Morningstar.

On an annualized basis, according to Invesco, RSP's index, the S&P 500 Equal Weight Index, has generated an 11.5% gain since inception, which compares to a 10.8% annualized return for the S&P 500 Index over the same period.

“Advisors can tell clients that if and when the rest of the 490-plus companies in the index begin to catch up, investors will be more exposed to those gains with an equal weight approach,” said Jeff Schwartz, president of Markov Processes International in Summit, N.J.

“Additionally, equal-weighted indices have an important quirk where the average or mean return of the portfolio is slightly above the median,” he added. “This means that the investor should expect to have a return that is slightly better than half the companies in the portfolio.”

Paul Schatz, president of Heritage Capital in Woodbridge, Conn., sees equal-weight indexes as the start of a longer-term story.

“The Mag Seven has struggled lately and at the same time the New York Stock Exchange advance-decline line has been chugging higher, which is expressed in RSP finally trying to hold its own against SPY,” he said.

Chuck Etzweiler, senior vice president of research at the advisory firm Nepsis in Minneapolis, said equal-weighted and factor-based indexes are part of the nuance that can make indexed investing “quite confusing to even the most intuitive investor.”

“Equally weighted indexes not only provide a greater level of diversification as they lower concentration risk, (but) their methodology allows for a greater number of companies down the market-cap stream to be included, such as mid and small cap companies,” he said. “And anytime an equal-weight process begins to outperform it usually shows a broadening out of companies achieving higher price appreciation and suggests a near term healthy economic environment."

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48.

I was there for the dot-com bust. Here's why the AI boom isn't the same.

2024-03-19 17:59:44 by Allan Sloan from Yahoo Finance

The booming prices of artificial intelligence stocks have some obvious parallels with the dot-com bubble that inflated the stock market to outrageous highs in 1999 and 2000. Parallels that make some investors nervous today.

According to a recent survey from Bank of America, 40% of fund managers think AI stocks are in a bubble (45% say no, and 15% don't know).

But as someone for whom the dot-com bubble was current events rather than history, I can tell you that today’s market isn’t remotely like the dot-com bubble market was.

How can I say such a thing?

It’s because the investing world has changed fundamentally from what it was in the dot-com bubble days.

Back then, besotted people (I wouldn’t call them investors) paid whatever the market was asking for ridiculously priced stocks like Pets.com, Boo.com, and Webvan, which ultimately croaked and left shareholders with nothing.

Why were people loading up with individual stocks? The fear of missing out on the internet wave certainly kept people piling money onto the table as they looked to quintuple their money. But the main reason was that back in 2000, people simply didn’t invest like they do now, as broad-based index funds were pretty much nonexistent compared to today.

So people who had bought into the dot-com hype — and there were plenty of them — mostly bought individual stocks.

These days, people talk — mistakenly, in my opinion — about the S&P 500 (^GSPC) being in a bubble, given the concentration of a handful of stocks powering the index. Back then, the Nasdaq market was the hot thing. And boy, did that bubble burst.

Getty Images via Getty Images

One of the most bubbly events took place on Jan. 10, 2000. That’s when Gerald Levin had Time Warner, the media and entertainment company that he was running, do the dumbest deal in history: selling itself to America Online in return for AOL stock, which was a dot-com megabubble.

(You may have read about this deal lately because Levin died last week and many obituaries mentioned his AOL debacle.)

Two months after the Time Warner-AOL deal was announced — on Mar. 10, 2000 — the Nasdaq, which had more than doubled from a year earlier, hit its closing peak of 5,048.62.

Then the slide began. And kept on going. And going. And going.

Ultimately, the Nasdaq bottomed out at 1,114.11 on Oct. 9, 2002. That was 78% below its high. It didn’t score another new high until April 23, 2015 — more than 15 years after the previous peak.

Even one of the high-quality companies that survived the bubble — Cisco Systems — hasn’t been a great investment. It was recently trading for about 30% less than it fetched on Peak Bubble Day.

Barring a totally unforeseen catastrophe, can you see the S&P losing 78% of its value in a little over two and a half years from now? I sure can’t see that happening. Especially given the trillions of dollars currently sloshing around in S&P index funds, with more money flowing in on a regular basis from employers and employees participating in benefit plans and from institutional investors such as pension funds for whom the S&P is a benchmark.

But, you say, what about the Magnificent Seven tech companies whose stocks more than doubled last year and drove the S&P to new high after new high?

The S&P’s total return — price increases plus reinvested dividends — for the year was 26.3%. Doesn’t this mean that we’re in a bubble?

I don’t think so. Among the reasons is that even though the Seven were incredibly hot, the other S&P companies — let’s call them the Non-Magnificent 493 — had a total return of 9.9%, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. That’s about the average return the US market has shown over the long term.

Bob Riha Jr. via Getty Images

Amazingly, this year’s market, despite a recent decline, is on track to outperform last year’s market. The S&P had returned 7.28% through Friday’s close, according to Silverblatt. Extrapolate that 2.5-month return to a full year and you get 34.9%.

And now, some of last year’s Magnificent Seven are having a less-than-magnificent 2024. Tesla (TSLA) was down 34.2% as of Friday’s close — the worst performer in the S&P, according to Silverblatt.

Nvidia (NVDA) accounted for 32% of the S&P’s gain this year, he says, with Microsoft (MSFT), Meta (META), and Amazon (AMZN) accounting for another 28%. Apple (AAPL), however, is down for the year, and Alphabet (GOOG, GOOGL) has only a marginal gain. (So perhaps we should rename the Magnificent Seven the Fab Four?)

The point here is that it doesn’t seem very bubbly when three of the Magnificent Seven aren’t doing well and yet the S&P keeps chugging along.

Look. I’m not telling you that the market is any sort of bargain these days — it’s not cheap by any standard. And I’m not telling you that it’s not going to decline, possibly sharply, over the mid- to long-term.

But what I am telling you is that there’s a big difference between a high-priced market like today’s and an insanely priced market like the Nasdaq was in the dot-com bubble days.

There may be some difficult times ahead for investors. But a decline of almost 80% over the next two and a half years? As we say in the part of the world in which I live: fuhgeddaboudit.

Allan Sloan is an award-winning journalist and contributor to Yahoo Finance.

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49.

"Hold Onto Your Hockey Sticks" - Econ Data All Surprises (revised)

2024-03-14 16:54:00 by Mark Vickery from Zacks

Thursday, March 14th, 2024

We have lots of economic data out before today’s opening bell, and all of it — all of it — is surprising. The biggest of these reports is the Producer Price Index (PPI), the sister report of the Consumer Price Index (CPI) numbers (which came mostly in-line with expectations), so we’ll start there: +0.6% on headline month over month was double expectations, the highest since September of last year and double what was initially reported a month ago.

Stripping out food and energy, the core PPI month over month came in 10 basis points (bps) hotter than projected, +0.3%. This one follows a 10 bps revision the previous month, to +0.5%. Ex-food, energy and trade, this figure comes to +0.4%, down 20 bps month over month. Year over year on headline leaps to +1.6% from the +1.2% expected and the +0.9% reported a month ago. Core PPI year over year is flat at +2.0%, while ex-food, energy and trade was +2.8%, up from +2.6%.

This wholesale inflation picture gets fed into Personal Consumption Expenditures (PCE) data, which is due at the end of the month. PCE is the Fed’s preferred metric of inflation, and so we can expect these numbers won’t make them leap from their chairs to start cutting interest rates. More surprising, though, is how off-kilter this data was compared to estimates when we contrast these figures against the in-line CPI report earlier this week. We saw basically no sign of meaningful wholesale price inflation in the retail CPI.

Speaking of retail, U.S. Retail Sales came in 20 bps lower than estimates, to +0.6% from +0.8% initially reported, but that’s not the biggest surprise here. Last month’s revision, the original print of which was already pretty low at -0.8%, fell to -1.1% this morning. Ex-autos was +0.3% versus +0.4% expected, but revised for the previous month down 20 bps to -0.8%. Ex-autos and gas was -0.3%, but revised previously down to -0.8% from -0.5%. Control was unchanged at +0.4%.

Initial Jobless Claims also keep stubbornly lower than anticipated: 209K versus 216K expected. So far this year, the highest week of new jobless claims was 225K — this was basically the mean average of the entire previous year, which itself was befuddlingly consistently low. Continuing Claims? Same deal: for the second time in the past month of so, we’ve seen 1.9 million longer-term jobless claims, only to see revisions pull back below it the following week.

But this week’s data is even more severe (in a good way, ultimately) than they were the last time. A total of 1.811 million longer-term jobless claims was below the originally posted 1.906 million last week, but this figure has come crashing down to 1.794 million in the present read. This now makes 15-straight weeks below the last time we struck 1.9 million, back in November of last year. For some context, even 2 million weekly long-term jobless claims is consistent with an overall healthy labor force. This finely articulated data suggests its gotten even better. But should we expect a big revision next month?

Pre-market futures have largely looked past the possible bearish ramifications within. Actually, there are no bearish ramifications as long as the numbers all complement a strong economy, which they appear to do. But the longer the market gets used to maneuvering in a high interest-rate environment, the longer it will be until the Fed cuts interest rates. Currently, consensus for the first cut has receded back to June of this year, but if the data continues to come in good, perhaps we’ll have to hold onto our hockey sticks.

(NOTE: We are re-issuing this article to correct a mistake. The original version, posted earlier this morning, should no longer be relied upon.)

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50.

"Hold Onto Your Hockey Sticks" - Econ Data All Surprises

2024-03-14 14:51:00 by Mark Vickery from Zacks

Thursday, March 14th, 2024

We have lots of economic data out before today’s opening bell, and all of it — all of it — is surprising. The biggest of these reports is the Producer Price Index (PPI), the sister report of the Consumer Price Index (CPI) numbers (which came mostly in-line with expectations), so we’ll start there: +0.6% on headline month over month was double expectations, the highest since September of last year and double what was initially reported a month ago.

Stripping out food and energy, the core PPI month over month came in 10 basis points (bps) hotter than projected, +0.3%. This one follows a 10 bps revision the previous month, to +0.5%. Ex-food, energy and trade, this figure comes to +0.4%, down 20 bps month over month. Year over year on headline leaps to +1.6% from the +1.2% expected and the +0.9% reported a month ago. Core PPI year over year is flat at +2.0%, while ex-food, energy and trade was +2.8%, up from +2.6%.

This wholesale inflation picture gets fed into Personal Consumption Expenditures (PCE) data, which is due at the end of the month. PCE is the Fed’s preferred metric of inflation, and so we can expect these numbers won’t make them leap from their chairs to start cutting interest rates. More surprising, though, is how off-kilter this data was compared to estimates when we contrast these figures against the in-line CPI report earlier this week. We saw basically no sign of meaningful wholesale price inflation in the retail CPI.

Speaking of retail, U.S. Retail Sales came in 20 bps lower than estimates, to +0.6% from +0.8% initially reported, but that’s not the biggest surprise here. Last month’s revision, the original print of which was already pretty low at -0.8%, fell to -1.1% this morning. Ex-autos was +0.3% versus +0.4% expected, but revised for the previous month down 20 bps to -0.8%. Ex-autos and gas was -0.3%, but revised previously down to -0.8% from -0.5%. Control was unchanged at +0.4%.

Initial Jobless Claims also keep stubbornly lower than anticipated: 209K versus 216K expected. So far this year, the highest week of new jobless claims was 225K — this was basically the man average of the entire previous year, which itself was befuddlingly consistently low. Continuing Claims? Same deal: for the second time in the past month of so, we’ve seen 1.9 million longer-term jobless claims per week, only to see revisions pull back below it the following week.

But this week’s data is even more severe (in a good way, ultimately) than it was the last time. Totals of 1.906 million posted last week are now revised down to 1.811 million — now 15-straight weeks below the last time we struck 1.9 million, back in November of last year. For some context, even 2 million weekly long-term jobless claims is consistent with an overall healthy labor force. This finely articulated data suggests its gotten even better. But should we expect a big revision next month?

Pre-market futures have largely looked past the possible bearish ramifications within. Actually, there are no bearish ramifications as long as the numbers all complement a strong economy, which they appear to do. But the longer the market gets used to maneuvering in a high interest-rate environment, the longer it will be until the Fed cuts interest rates. Currently, consensus for the first cut has receded back to June of this year, but if the data continues to come in good, perhaps we’ll have to hold onto our hockey sticks.

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