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1.

XLK, Technology ETFs Jump on Cooler Inflation

2024-06-13 12:00:00 by Kent Thune from etf.com

Growth - Chart - Up Trend - Stocks

Technology ETFs led the surge of higher prices Wednesday as rate-sensitive exchange-traded funds climbed sharply higher on cooler-than-expected data in May’s CPI report. 

Renewed hopes for a rate cut from the Fed by September helped to lift growth stocks by as much as 2.5%, as measured by the Technology Select Sector SPDR Fund ETF (XLK)

Rising hopes also lifted the S&P 500, the Nasdaq Composite Index and the Nasdaq-100 to all-time highs, helping to push the SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ) to respective price highs. 

The boost in investor sentiment appeared to be primarily driven by the first zero print, or no monthly change in the CPI, in the current cycle.  

This unexpected lull suggests that inflation can move closer to the Fed’s preferred 2% yearly growth rate. 

Later Wednesday, investors received a glimpse into the Fed’s rate policy for 2024, as its “dot plot” projected one rate cut this year, meeting investors’ adjusted expectations. 

Of the central bank’s Federal Open Market Committee members, four plotted no rate cuts this year, seven see one cut, and eight see two cuts. 

Why Lower Rates Are Good for Technology ETFs

Technology ETFs tend to rise in price when investors expect interest rates to fall. The fundamental reason for this is that when interest rates drop, the value of a growth stock's future earnings increases, making them more attractive to investors and potentially leading to faster stock price appreciation. 

Tech companies typically invest heavily in research and development and future growth, rather than paying out dividends to shareholders currently. When interest rates are low or expected to fall from higher levels, investors tend to become interested in the steady returns offered by bonds (which become less attractive) and are more willing to invest in riskier assets like growth stocks, potentially driving their price up. 

It's important to remember that this is a general trend and not a guarantee. There are other factors that can affect the price of technology ETFs, and past performance is not necessarily indicative of future results. 

WWDC, Nvidia Market Cap, XLK Holdings

In addition to friendlier news on the interest rate front, XLK is getting a boost from this week’s Worldwide Developers Conference (WWDC), an information technology event held annually by Apple Inc. Their new AI-driven “Apple Intelligence” has boosted AAPL stock, which is the top holding in XLK with over 20% allocation. 

Also noteworthy for XLK investors, Nvidia’s market cap is set to surpass Apple’s; thus, XLK may be preparing for an allocation weight change in the fund’s holdings. The chipmaker’s weight could jump above 20% from 6% in an XLK rebalance, according to estimates from Bloomberg. 




2.

Fed, Powell Lay Out Inflation Expectations

2024-06-12 22:37:00 by Mark Vickery from Zacks

Wednesday, June 12th, 2024

This trading session was, in some ways, the story of two shoes dropping. The first, ahead of today’s open, was the Consumer Price Index (CPI) for May, which came in better than expected: 0.0% month over month (decidedly not inflationary), and +3.3% on the year-over-year Inflation Rate: 20 basis points (bps) below the April tally. The second shoe to drop is the latest Federal Open Market Committee (FOMC) meeting the afternoon, where the Fed unsurprisingly kept interest rates unchanged from the 5.25-5.50% level we’ve had since last summer.

The Fed sees economic activity continuing at a sold pace. Job gains are still considered strong. Progress on inflation has been made, albeit modestly. The committee maintains its +2% inflation objective, and says it sees a better balance on inflation metrics than a year ago — largely due to restrictive interest rate policy. In 2022, the Fed raised rates +425 bps, and another +100 bps in 2023. We’re still awaiting the first move of 2024, obviously.

The Fed continues to remark that the economic outlook is still uncertain. It still says it won’t start cutting interest rates until inflation moves more “sustainably” toward +2%. In today’s statement, the monetary policy body also said it would make adjustments to current policy if new economic risks emerge. You might read this as, “We’re going to keep everything tight for now, but if something breaks, we will respond.”

In the press conference directly following the FOMC release, Fed Chair Powell articulated these positions. He began by once again saying the body only makes decisions meeting by meeting, and are not going to get ahead of themselves — least of all in speculating on what month rates might finally start coming down. We’re “very data dependent,” Powell said. “We saw today’s CPI report as progress and building confidence, but it does not warrant changing policy at this time.”

The Fed’s favored inflation metric is the PCE report, which comes out at the end of this month. PCE stands for Personal Consumption Expenditures, of course, and the +2.7% reported for April he said “is a good place to be.” Powell said that no one on the committee has any interest rate hikes as their base-case scenario, going forward. “It’s pretty clear policy is restrictive and having the effects we’d hoped for.”

The main sticking point for Powell, and presumably the rest of the Fed, is the relative ambiguity of falling inflation rates. He noted that the labor force supply has come up “quite a bit,” with both job openings and quits coming down. Unemployment has elevated 60 bps over the past year — and this remains consistent with the “soft landing” scenario the Fed has been attempting to conjure for more than two years now. “We’re getting good results here,” Powell said. “It’s just gonna happen more slowly than we thought.”

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3.

Major ETFs in Positive Territory as Fed Leaves Rates Intact

2024-06-12 17:50:54 by James Rubin from etf.com

Federal Reserve building

Equity and fixed income ETFs were little changed after the U.S. central bank left interest rates untouched for a seventh consecutive time amid ongoing concerns about inflation, even as the widely watched Consumer Price Index (CPI) earlier Wednesday showed prices cooling in May.

The bank's Federal Open Markets Committee held the Federal funds rate—the short-term interest rate commercial banks charge one another for borrowing and lending their excess reserves—between 525 and 550 basis points, where it has been since last July.

The largest stock ETFs by assets under management, the SPDR S&P 500 ETF Trust (SPY) and Vanguard 500 Index Fund (VOO) slipped a few fractions of a percentage point after the 2 p.m. announcement but were up about 1% in Wednesday trading. Rate sensitive funds—the bond market proxy, iShares 20+ Year Treasury Bond ETF (TLT) and growth stock proxy Invesco QQQ Trust (QQQ)—were up similarly on the day.

"In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent," the Fed said in a statement. "In considering any adjustments to the target range..., the Committee wil carefully assess incoming data, the evolving outlook, and the balance of risks."

The Fed's announcement came just hours after the May Consumer Price Index (CPI) registered no gain from the previous month and dropped slightly to 3.3% on an annual basis from April's 3.4.%—slightly lower than analysts had forecast, although the latter number was well above the central bank's 2% target. The report followed less than two weeks after the Personal Consumption Expenditures report held steady after months of disappointing readings. 

In comments later, Fed Chair Jerome Powell said that FOMC members had considered the CPI before announcing its decision. "When there's an important data print during the meeting, we make sure people remember that they have the ability to update," Powell said. "Some people do. Most people don't."

He noted that the bank will be eyeing Thursday's release of the May Producer Price Index (PPI) and the personal Consumption Expenditures index (PCE) later in the month. 

Investors have been seeking hopeful economic signals that would allow the Fed to begin reducing interest rates without the risk of spurring inflationary pressure. The likelihood of a rate cut was less than a percentage point in the days leading up to the two-day FOMC meeting that began Tuesday, according to the CME Fed Watch tool. 

Rate Cut Probability Rises

Still, the probability of a 25-basis point rate cut in September spiked past 60% Wednesday after lingering well below 50% prior to the latest CPI. The CME analysis, based on Fed funds futures pricing data, had been showing the first cut more likely coming in November with multiple cuts totaling 75 basis points occurring by April 2025. That scenario veered starkly from the outlook at the top of this year, when a steady decline in inflation had analysts expecting at least one rate cut before July. 

But surprisingly stubborn inflation readings starting in January and a robust jobs market, which is linked to inflationary pressure, has led the Fed to become more cautious. 

In his remarks, Powell noted that "recent inflation readings have been more favorable than earlier in the year," but he would not commit to a timeline for rate cuts. "We want to gain further confidence," Powell said. "Certainly, more good inflation readings will help with that. It's going to be not just the inflation rating readings. It's going to be the totality of the data, what's happening in the labor market, what's happening with the balance of risks, what's happening with growth."

The Fed's intransigence is at odds with a number of other central banks, which have turned dovish. Last Thursday, the European Central Bank cuts its deposit facility rate from 4% to 3.75%, and the bank is expected to cut rates three times this year. The Bank of Canada also cut rates last week. 

In its statement, the bank reiterated its commitment to base any rate cuts on data showing a sustainable decline in inflation. 

"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," the bank said. "In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities."

Read More: Europe ETFs Near Multiyear Highs After ECB's First Rate Cut




4.

Apple stock surges to record high after AI announcements

2024-06-11 20:05:49 by Josh Schafer from Yahoo Finance

Apple's stock (AAPL) surged 7% on Tuesday to reach a record-high close for the first time in 2024 as investors digested the announcement of its AI platform, Apple Intelligence.

Shares in the iPhone maker fell slightly in premarket trading on Wednesday, down less than 1%.

After the stock fell on Monday during and after the company's WWDC conference, the stock moved higher, notching its best single-day performance since November 2022 as some Wall Street analysts cheered the company's announcements.

"If you look at the signal away from the noise, you realize that this is unprecedented capability that Apple is going to introduce, and it's going to integrate AI into everyday life," D.A. Davidson managing director Gil Luria told Yahoo Finance (video above).

Following Monday's event, Luria upgraded Apple to Buy from Neutral and raised his price target to $230 from $200. 

On Monday, Apple announced "Apple Intelligence," its long-awaited foray into the generative AI space. The company said the platform would be integrated across the company's hardware and software products, ranging from the iPhone and Mac to mail, messages, and photos. Apple Intelligence will be available for the iPhone 15 Pro and iPads and Macs running Apple's M1 series chips and newer later this fall.

Key features of the launch include updates to Siri, which will now be able to parse messages for addresses or find photos in a phone's photo library based on voice prompts. Apple also launched new software updates for its iPhones, watches, and computer products.

"Our experience with consumer surveys with prior generations of iPhone launches tell us that the hardware upgrade cycle is more driven by a collection of feature upgrades across diverse applications, which in aggregate will provide ... reasons to upgrade over the next few years," JPMorgan senior analyst Samik Chatterjee wrote in a note to clients on Monday.

He added, "The release of the AI features across Mac, iPads and iPhones will support an upgrade cycle across all the devices."

The announcements capped off a month of excitement for the stock as rumors around some of the news, including a partnership with ChatGPT operator OpenAI, had already been percolating.

After briefly being passed by Nvidia (NVDA), the stock of the iPhone maker is now back as the second-most-valuable company (behind Microsoft) in the world with a market capitalization of more than $3.1 trillion. 

Following a slow start to the year amid concerns of slowing iPhone demand, Apple stock is now up more than 15% in the past two months. Analysts like Luria and Chatterjee believe the next iPhone upgrade cycle could be on the horizon as the new AI features are only coming to iPhone 15 pro and later generations.

"As people buy new phones this holiday season, they're going to see this great functionality," Luria said. "They're going to show their friends and family and the product upgrade cycle will happen over the next few months and quarters."

This, Luria argued, should be a key catalyst for the stock moving forward. 

"The stock has been flat because there hasn't been revenue growth at Apple," Luria said. "Now, we think that this will allow Apple's overall growth to accelerate from the low single digits into the mid-, maybe even high-single digits over the next year or two. That's what can drive Apple's stock."

CUPERTINO, CALIFORNIA - JUNE 10: Apple CEO Tim Cook delivers remarks at the start of the Apple Worldwide Developers Conference (WWDC) on June 10, 2024 in Cupertino, California. Apple will announce plans to incorporate artificial intelligence (AI) into Apple software and hardware. (Photo by Justin Sullivan/Getty Images)
Apple CEO Tim Cook delivers remarks at the start of the Apple Worldwide Developers Conference (WWDC) on June 10, 2024, in Cupertino, Calif. (Justin Sullivan/Getty Images)
Justin Sullivan via Getty Images

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

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5.

On Oddsmaking CPI and the Fed's Decision

2024-06-11 14:37:00 by Mark Vickery from Zacks

Tuesday, June 11th, 2024

Mid-week, we have two potentially very big catalysts for the stock market. First, monthly inflation metrics via the Consumer Price Index (CPI) for May hit the tape ahead of Wednesday's opening bell, then mid-afternoon we get the latest monetary policy statement from the Federal Open Market Committee (FOMC) regarding interest rates. We’re seeing some pairing of these two pending issuances, but let’s see if this is warranted.

CPI numbers have established a higher “floor” than we’ve seen in a couple decades. The Inflation Rate — that is, year over year headline CPI (not core) — two years ago was +9.1%, higher than at any point in the U.S. since November of 1981, based on heavy supply chain problems in the wake of the pandemic clouds lifting. Since June ’22, we have seen the Inflation Rate come down 570 basis points (bps), which is impressive, but only to +3.4% — still notably above the Fed’s target inflation rate of +2%.

The Fed had at first been criticized for moving too slowly. Investment bankers were calling for the Fed to raise rates from 0-0.25% back in the fall of 2021, but Chairman Powell & Co. waited another half a year, and even then only dipped a toe in the water, in the form of a +25 bps hike in March of '22. From there, the Fed moved aggressively but very methodically, growing the Fed funds rate by +425 bps in full-year 2022 and +100 bps in 2023. Obviously, we have yet to move at all in 2024.

At the start of the year, we expected to be headed to a sub-5% Fed funds rate by now. The first rate cut was supposed to happen in March and the second tomorrow, which would have taken our current 5-5.25% rate down to 4.75-5.00% — the first time we’d have a “4-handle” since May of last year. But if we look back at the last time we were above +5% on interest rates, back in the late 00ughts, it was for 15 months. (That was until the clear unraveling in financial markets after years of mortgage-related manipulation.)

Perhaps we feel we’re being starved out with higher interest rates. But relatively recent history shows that we can sustain +5% when the economy is robust, as it continues to prove. Those prior prognostications at the start of 2024 also included the labor market shedding a large number of jobs, which has not happened. Neither have price points crashed through the floor — in fact, though still an annoyance to the average American (see: poll numbers for the 2024 election), the economy appears to be humming along at slightly elevated rates of inflation.

Some people feel a big CPI surprise will change the Fed’s mind tomorrow. Currently, the Inflation Rate is expected to remain steady at +3.4%, with CPI core, year over year, dipping to +3.5% from +3.6% last time around. A big downward surprise on the Inflation Rate, say 50 bps, would take us to a sub-3% level for the first time since March 2021 — prior to the Great Reopening which led to such high rates of inflation in the first place. Even then, however, we’d be at +2.9%: clearly on a downward trajectory but still at least half a point higher than ultimately desired.

Based on trackable consumer habits, this seems unlikely anyway. We do see a month or more of evidence that Americans are now balking at higher price points (from the housing market to summer cinema season), but nothing that would support a major shakeup in CPI data. Even if we do get such a surprise, we’re still going to be a measurable distance from an optimal situation for the Fed to go about cutting rates. If we’re putting odds on this? Forget June, still. July may still be too soon. And September might be too close to the election. But only then will we have stayed at +5% or above for as long as we had the last time.

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6.

CPI Report, Dot Plot Loom Over Rate-Sensitive ETFs

2024-06-11 12:00:00 by Kent Thune from etf.com

Inflation


 

After last week’s hotter-than-expected jobs report, anticipation is building for this week’s Consumer Price Index (CPI) reading, due before the market opens Wednesday, and the Fed’s rate policy decision and projections to follow that afternoon. 

What can investors expect and what will be the impact on rate-sensitive ETFs, such as the bond market proxy iShares 20+ Year Treasury Bond ETF (TLT) and the growth stock proxy Invesco QQQ Trust (QQQ)

While investors are expecting only a slight downtick in inflation, the greatest potential for market-moving news this week is likely to be Fed chair Jerome Powell’s statement following the CPI report, as well as its dot plot forecasting potential rate cuts in 2024 and beyond. 

CPI Report and Dot Plot Expectations

The CPI report is expected to show a slight cooling for May, with an expected increase of 0.1% from the previous month’s headline number, while rising by 3.4% year-over-year, unchanged from April. While slower growth month-over-month may provide some relief to investors, a 3.4% annual increase is still far above the Fed’s 2% target. 

The Fed’s “dot plot,” formally known as the Summary of Economic Projections, is expected to show fewer interest rate cuts than policymakers anticipated three months ago, firming investors’ higher-for-longer rate expectations. 

The dot plot outlines individual FOMC member forecasts for economic factors like GDP growth, unemployment and inflation over the next few years and the longer term. In other words, the dot plot is a visual representation of how each member expects the federal funds rate to be set over the long run. It's essentially a chart with "dots" representing individual projections for the key interest rate. 

TLT, Rate-Sensitive ETF Volatility

As recently as December, investors had expected at least three rate cuts in 2024, which was projected in the previous dot plot. From its price low in October to the end of 2023, investors had bid up the price on the TLT ETF more than 20%, as prices for the rate-sensitive ETF move in the opposite direction of Treasury yields. 

With three consecutive months of hotter-than-expected inflation reports in 2024, TLT’s price corrected downward 6% this year, as of the end of last week’s trading. 

Growth stocks, which can also benefit from a falling interest rate environment, have also seen similar volatility in the past several months. The QQQ ETF also jumped nearly 20% from October through December. While the tech-heavy ETF is still up 13% year-to-date, thanks to big gains on top holdings like Nvidia, the fund dropped 5% in April over inflation worries. 

This volatility is likely to continue until investors can gain a clearer picture of inflation, which may come from this week’s CPI and FOMC dot plot. 




7.

The stock market rally has been all about large caps

2024-06-11 08:00:19 by Josh Schafer from Yahoo Finance

Large-cap stocks have been the clear leader in the 2024 stock market rally. 

Bespoke Investment Group recently broke the S&P 500's year-to-date performance (^GSPC) into 10 baskets of 50 stocks, organized by the size of their market capitalization value. The top decile of the 50 largest stocks in the index was the only subsector to have outperformed the broader S&P 500 this year.

To Bespoke, this shows the recent trend in markets has generally been "the smaller the stock, the weaker the returns."

The move into large-cap stocks comes as investors have scaled back bets on interest rate cuts from the Federal Reserve this year amid sticky inflation reports.

The larger stocks have shown more resilience to higher interest rates in an environment where many expect rates to be held high for longer than initially expected. 

That's partly because large caps have continued to post robust earnings growth. In the first quarter, research from Deutsche Bank chief global strategist Binky Chadha showed earnings for a basket of stocks labeled "Mega-Cap Growth and Tech" grew 39% compared with 5.9% year-over-year growth for the S&P 500. The megacap basket includes the "Magnificent Seven" tech stocks, among a few other big names like Netflix (NFLX), Visa (V), and Adobe (ADBE).

HANGZHOU, CHINA - JUNE 3, 2024 - The NVIDIA logo and the Apple logo are pictured in Hangzhou city, Zhejiang province, China, June 6, 2024. On June 5, Eastern time, Nvidia's stock market value exceeded $3 trillion, officially surpassing Apple's market value and becoming the world's second largest technology giant by market value. It is worth noting that in just over 3 months, Nvidia's market value soared from $2 trillion to $3 trillion. (Photo credit should read CFOTO/Future Publishing via Getty Images)
The NVIDIA logo and the Apple logo. (CFOTO/Future Publishing via Getty Images)
CFOTO via Getty Images

This fundamental case has supported large caps when the outlook for interest rates and the trajectory for economic growth have become less certain. Meanwhile, small caps have continued to underperform no matter how interest rates move. Morgan Stanley chief investment officer Mike Wilson wrote in a weekly note to clients on Sunday night that this recent market action has him skeptical there will be a strong case for small-cap outperformance anytime soon. 

"We view higher rates as a clear headwind to small caps, but we're skeptical that lower rates offer a comparable benefit — a key reason we remain overweight large caps," Wilson wrote.

He added, "The economy is still expanding and trailing S&P 500 earnings growth is finally reaccelerating again led by large cap, high quality stocks."

The team found that within those indexes, stocks with a market cap over $1 trillion have returned a combined average of 41% this year, while those with market caps under $1 trillion have gained just 0.42% year to date. 

Notably, Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), and Nvidia (NVDA) are the only US stocks with market caps above $1 trillion. 

"The early days of the AI boom were pretty broad, but recently it has been the mega-caps, driven primarily by NVIDIA, that has been the only game in town," Bespoke's team wrote in its Monday note.

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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8.

Consumer expectations for stocks hit 3-year high in May

2024-06-10 17:40:31 by Josh Schafer from Yahoo Finance

Consumers are the most bullish they've been on the outlook for stocks since May 2021. 

The latest survey of consumer expectations from the Federal Reserve Bank of New York showed the mean perceived probability that stocks will be higher in the next 12 months rose to 40.5% in May, up from 38.7% in April.

The survey also showed consumers' expectations for inflation over the next year fell to 3.2% in May, down from 3.3% in April. Broadly, the New York Fed found households were feeling better about their financial situations, as more respondents reported being "better off than a year ago" while fewer respondents noted they were "worse off." 

The upbeat sentiment from consumers comes as stocks are near record highs. The S&P 500 (^GSPC) is up more than 12% this year while the tech-heavy Nasdaq Composite (^IXIC) has risen more than 14%.

An increasingly positive corporate earnings outlook has prompted several analysts to upgrade their year-end S&P 500 targets. The Street-high year-end target for the S&P 500 has moved up to 5,600 from 5,200 at the start of the year. 

The enthusiasm raises the question of whether the market is getting frothy. Typically, when Wall Street gets overly bullish, it's often the sign of the peak in a market rally, according to research from Bank of America. 

But in a research note on Monday, Bank of America head of US equity and quantitative strategy Savita Subramanian noted that sentiment is "not euphoric." Bank of America's Sell Side Indicator, which tracks Wall Street strategists' recommended allocation to stocks, rose to 55.3% in May, which the bank notes is still "neutral." A reading of 58% or higher would usually be a sell signal.

Bank of America's sell-side indicator shows Wall Street has yet to reach extreme bullishness amid the market rally.
Bank of America's sell-side indicator shows Wall Street has yet to reach extreme bullishness amid the market rally.
Bank of America US equity and quant strategy

Others on Wall Street are particularly concerned with what's being priced into the current bull case. Markets currently see about two interest rate cuts this year, largely built on a case that inflation will keep declining throughout 2024. RBC Capital Markets head of US equity strategy Lori Calvasina wrote in a note to clients on Monday her team continues to worry that "market participants have gotten a little too optimistic about the timing of cuts."

Calvasina's model projects the S&P 500 should be at 5,300, given the current consensus views on inflation and economic growth. This is about in line with the roughly 5,341 the S&P 500 opened up at on Monday. The risk, Calvasina notes, is if the inflation story continues to prove bumpy and doesn't play out as well as investors currently hope. 

"There is some modest downside risk to the US equity market if the Fed does nothing this year and inflation is stickier than expected," Calvasina said. 

In this scenario, Calvasina believes the S&P 500 could fall to 4,900, representing a roughly 8% pullback from current levels. 

NEW YORK, NEW YORK - NOVEMBER 24: A man sits on the Wall street bull near the New York Stock Exchange (NYSE) on November 24, 2020 in New York City. As investor's fear of an election crisis eases, the DowJones Industrial Average passed the 30,000 milestone for the first time on Tuesday morning.  (Photo by Spencer Platt/Getty Images)
A man sits on the Wall Street bull near the New York Stock Exchange (NYSE) on Nov. 24, 2020, in New York City. (Spencer Platt/Getty Images)
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


9.

After Big May, ETFs Headed for 2nd Best Year Ever

2024-06-10 12:00:00 by Jeff Benjamin from etf.com

ActiveETFS

The bullish mood in financial markets led to a big May for domestic equity ETFs, including an especially strong showing for active strategies, and has now put funds on course to reach the second highest level of inflows in their history, according to the author of a State Street Global Advisors report. 

The report, which credits the ongoing rally by the technology and communication services sectors for keeping the risk-on mood alive among investors, showed $92 billion moving into ETFs during May, the best ever for the month and ninth-best overall for any month. 

Of those inflows, $60 billion went into equity ETFs, including $50 billion into U.S. equity strategies. That trend aligns with the strength of broader markets. The S&P 500 has gained 11.2% year-to-date. this year through May.

Projecting from the $320 billion in inflows that has gone into ETFs so far this year to a full-year total, report author Matthew Bartolini, head of SPDR Americas Research at Boston-based SSGA, said that ETFs would generate $770 billion in 2024. But Bartolini added that this total doesn't account for the "usual 31% bump for second-half inflows," which could put the total at $890 billion, the second highest annual finish behind only the $990 billion in 2021. 

Active ETFs Raking in Assets

The SSGA findings showed strong investor appetite for actively managed strategies, with $22 billion moving into active ETFs in May, marking the 50th consecutive month for inflows into active ETFs.

Through May, active ETFs accumulated more than $108 billion, which represents 33% of all ETF inflows despite representing just 7% of all ETF assets.

“The pace is unlike anything we’ve seen, and active ETFs could hit a record $260 billion if the year-to-date average flow trends continue,” Bartolini said.

The $13 billion into active equity ETFs in May represented the third-highest monthly inflows for the category, according to the report. Active bond ETFs received $7 billion during the month, marking the second-highest monthly inflows for the category and a record 13th consecutive month with more than $1 billion of inflows.

Alternative-strategy ETFs received $2.7 billion in May for a five-month total of $18.6 billion.




10.

4 Reasons to Buy Invesco QQQ Trust Like There's No Tomorrow

2024-06-09 13:45:00 by Neil Patel, The Motley Fool from Motley Fool

Some investors might not want to pick individual stocks for all or even some of their portfolios. This is where something like an exchange-traded fund (ETF) comes into the picture.

While an ETF that tracks the S&P 500 might get a lot of the attention because it is a top benchmark for assessing how the stock market is doing, there's another ETF that investors need to consider that could potentially lead to stronger long-term returns. I'm talking about the Invesco QQQ Trust (NASDAQ: QQQ).

Here are four reasons why you should buy this ETF like there's no tomorrow.

Portfolio composition

The Invesco QQQ Trust is unique in that it tracks the performance of the Nasdaq-100 index. This includes the top 100 non-financial companies that trade on the Nasdaq exchange.

It's worth discussing the ETF's composition. It's heavily weighted in two sectors. Technology has a heavy presence, representing 59% of the fund's assets, while consumer discretionary accounts for 18%. These areas of the market have typically been where many winners come from.

Investors are certainly familiar with some of the Invesco QQQ Trust's top positions. The so-called "Magnificent Seven" combined make up a notable 42% of assets. They are some of the most dominant enterprises on planet Earth. And they have proven their ability to disrupt various industries.

The Invesco QQQ Trust also has 23% of the portfolio invested in sectors besides tech and consumer discretionary. This at least provides some level of industry diversification.

Impressive track record

If you'd invested $10,000 in the Invesco QQQ Trust 10 years ago, you would have $54,600 today. That translates into a superb 18.5% annualized return when including dividends. It's hard to argue with this track record.

The Invesco QQQ Trust's gain outpaces the 232% and 341% returns that the S&P 500 and the Nasdaq Composite index, respectively, have been able to achieve since June 2014. Again, it goes back to the broad exposure that this ETF has to the tech and consumer discretionary sectors.

Investors shouldn't blindly assume that this top-notch performance is going to continue. But while past results don't guarantee future returns, the companies that dominate the Invesco QQQ Trust generally have wide economic moats, solid growth prospects, and a focus on being leaders in the artificial intelligence race.

Don't forget about fees

Some professionals in the investment industry are known for charging exorbitant fees for managing others' capital. For example, typical active fund managers charge annual fees that are based on a percentage of assets that are managed. And hedge funds cost even more. Over a long period of time, these fees can seriously eat away at an investor's return, so it's important to be mindful of them.

Luckily, the Invesco QQQ Trust has an expense ratio of just 0.20%. This means that for every $10,000 that's invested in the ETF, you only pay $20 in annual fees. That's a very compelling proposition, particularly when you remember its impressive historical track record.

Low maintenance

Investors rightfully focus on the most obvious factors when looking at an ETF, like the previously mentioned composition, track record, and fees. However, there's an overlooked aspect that deserves some attention.

If you're someone who isn't planning to retire for at least the next 10 years, then you can adopt a strategy of dollar-cost averaging into the Invesco QQQ Trust every month or quarter. This requires almost no effort on your part. It makes investing in the Invesco QQQ Trust a very low-maintenance way to build wealth.

And that leaves lots of time to focus on the things that are most important to you.

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.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $740,688!*

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 quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of June 3, 2024

Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.


11.

Here's How Investing $50 Per Week Can Generate $35,000 in Annual Dividend Income by Retirement

2024-06-09 12:05:00 by David Jagielski, The Motley Fool from Motley Fool

Investing for the future can be difficult, as unexpected expenses always seem to come up. One way to try to encourage yourself to invest is by not aiming for massive savings goals. Instead, slowly putting aside money on a weekly basis can be much more achievable, and still allow you to build up your portfolio's balance over the long haul.

And if you can do that, you could be on the path to creating a tremendous portfolio by the time you retire. Below, I'll show you how saving and investing $50 per week can ultimately transform into $35,000 or more in annual dividend income by the time you retire.

How saving $50 per week can result in a portfolio worth around $800,000

If you invest $50 per week, that's the equivalent of $200 per month, or approximately $2,400 per year. Over a 30-year period, that would result in more than $72,000 in savings. It's a good chunk of savings, but it isn't a life-changing amount.

This is where the power of compounding comes into play. If instead of putting that $50 into your bank every week, you invested it into an exchange-traded fund (ETF), you could accelerate your portfolio's growth significantly. Suppose, for example, that you invest that money in a fund such as the Invesco QQQ Trust (NASDAQ: QQQ).

That fund tracks the top 100 non-financial stocks on the Nasdaq, and it can help give you exposure to some of the best growth stocks in the world, including Microsoft, Nvidia, Apple, and many others. Over the past 20 years, the fund has generated total returns (including dividends) of 1,3950%. That averages out to a compounded annual growth rate of 14.4%. For the sake of being conservative, let's assume that the growth rate you might average from that fund moving forward might be closer to around 12%.

Assuming you were to invest $50 per week into the fund, this is how your portfolio balance could climb over a 30-year period.

Year Balance
5 $17,826.34
10 $50,285.59
15 $109,389.35
20 $217,009.00
25 $412,969.27
30 $769,785.45

Calculations by author. 

By year 30, your portfolio could be worth around $770,000. The actual growth rate you average over that period will ultimately determine how high the balance will be. But it would be a much larger nest egg than simply saving that $50 per week and tucking it away into a bank account.

Turning that savings into a stream of recurring dividend income

Once you have that nest egg built up, you can put it to work accumulating dividend income for you. An example of a dividend-focused fund you could invest in today is the Vanguard International High Dividend Yield Index Fund, which yields around 4.9%. At that high of a rate, you could generate more than $37,000 in annual dividends per year.

You don't have to aim that high, however. As long as you can obtain a yield of around 4.6%, that would be enough to generate $35,000 in dividend income based on a portfolio balance of $770,000. And if you can get your portfolio even higher than that, then you would need even less of a yield to achieve that level of dividend income.

Saving and investing is a powerful combination

You may not have thousands of dollars saved up today, but any amount you can save and put into an ETF can help pave the way for a better future in the long run.

In the above example, I used $50 per week, but if you can save and invest more, that can help accelerate your portfolio's growth, which is why the number of investing years you have left may not be of utmost importance; you can make up for having fewer years remaining until retirement by saving and allocating more money to your portfolio.

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.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $740,688!*

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 quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of June 3, 2024

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, 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.


12.

2 Artificial Intelligence (AI) ETFs to Buy Now and Hold for Decades

2024-06-09 07:51:00 by Justin Pope, The Motley Fool from Motley Fool

The artificial intelligence (AI) hype has been on overdrive for the past 18 months. While AI has been around for years, recent advances in the technology mean AI is still very much in its infancy in terms of investment potential.

Investors should expect plenty more changes over the coming years with some companies moving up into the limelight while others fizzle out, unable to keep pace with competition. That leaves many investors interested in this sector wondering how to pinpoint the winning AI stocks that will remain winners long-term.

Exchange-traded funds (ETFs), which are buckets of individual stocks that trade under one ticker symbol, could be the answer. The diversification they offer means you don't have to pick specific winners, which benefits investors looking to capture the upside of artificial intelligence (AI).

Here are two AI-related ETFs that you can comfortably buy and hold for decades.

A broad gem with a proven track record

The Invesco QQQ Trust (NASDAQ: QQQ) doesn't market itself as an AI-dedicated fund, but its "DNA" could make it the most dependable AI ETF money can buy. It tracks the Nasdaq-100. This index is technology-heavy; about 60% of its stocks come from the tech sector. The rest are primarily healthcare and consumer discretionary stocks.

More importantly, the ETF's top holdings are already big-time players in AI. Names like Microsoft, Nvidia, Amazon, and Meta Platforms are in the top five, accounting for 26% of its total value. These big-tech companies are major players in AI-related fields like semiconductor chips (Nvidia), cloud computing (Microsoft and Amazon), and the metaverse (Meta Platforms). That's excellent AI exposure from companies that are already fundamentally rock-solid.

The fund has already shown strong results; the Invesco QQQ easily outperformed the S&P 500 and the Nasdaq Composite over the past decade:

QQQ Total Return Price Chart
QQQ Total Return Price data by YCharts

There's no guarantee that its outperformance will continue indefinitely, but betting on the biggest technology companies in the world has worked out well. Since these same companies are already at the forefront of the AI industry, it seems like a good idea to continue riding those horses for long-term growth.

A more concentrated AI fund with a high potential upside

Investors who are feeling a bit more adventurous might find an ETF that is specifically dedicated to AI appealing. The Roundhill Generative AI & Technology ETF (NYSEMKT: CHAT), launched in May 2023, aims to provide long-term outperformance by focusing heavily on generative AI and its growth potential. The big difference between this ETF and the Invesco QQQ is that it doesn't track an index. The fund managers of the Roundhill Generative AI & Technology ETF actively buy and sell positions regularly.

The potential benefit of an actively managed fund is that smart investment decisions can pay off with massive returns. Right now, the fund managers are bullish on Nvidia (the ETF's most significant position, at over 14%) and Microsoft (its second largest, at more than 10%). The fund currently has 50 holdings. The risk is that bad decisions by those managers can sap investors' returns.

So far, the Roundhill Generative AI & Technology ETF has performed well, outperforming the S&P 500 and the Nasdaq Composite since its inception:

CHAT Total Return Price Chart
CHAT Total Return Price data by YCharts.

Actively managed ETFs often charge higher fees than passively managed funds. The expense ratio for this one is 0.75%, significantly higher than the Invesco QQQ's 0.2%. That fee effectively puts this ETF on par with the Nasdaq Composite in terms of performance (so far). Still, the high fee won't matter as much if the investment returns are high enough for long enough.  

Ultimately, either of these funds could benefit long-term investors. According to a forecast from PwC, the global economic impact of AI could be more than $15 trillion annually by 2030. In that scenario, investors who put money into the trend will likely make out very well, regardless of which of these funds they own.

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.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $740,688!*

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 quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of June 3, 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. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool 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.


13.

3 Retirement ETFs Every Investor Should Own

2024-06-08 10:43:00 by Omor Ibne Ehsan from InvestorPlace

Retirement ETFs are crucial for anyone looking to put aside money decades into the future. Not everyone has the free time to scour through hundreds of individual stocks. ETFs give you lots of diversification and have hand-picked stocks from smart institutions that should continue compounding safely for decades. You also don’t have to go through the hassle of keeping up with each business you invest in.

Plus, many companies that offer 401(k) plans don’t have the option for you to pick individual stocks. I think having a list of retirement ETFs is very important.

Here are three retirement ETFs every investor should own. Before I dive in, you should know that the sizing here entirely depends on you. For the average Joe, I’d recommend putting the most money in the first pick.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Vanguard Total Stock Market Index Fund (VTI)

Illustration of an ETF in multiple sectors.Source: SWKStock / Shutterstock

The Vanguard Total Stock Market Index Fund (NYSEARCA:VTI) is an exchange-traded fund (ETF) that tracks the performance of the CRSP US Total Market Index (INDEXNASDAQ:CRSPTM1). This index represents 100% of the U.S. investable equity market and is a very solid long-term holding. Diversifying into everything may sound like overdoing it and being a laggard, but this ETF has actually been a better buy than the SPDR S&P 500 ETF Trust (NYSEARCA:SPY).

First, VTI has an expense ratio of just 0.03%. On the other hand, the SPY comes with a 0.09% expense ratio. A big plus is that you also get a 1.34% dividend yield here, compared to 1.26% on the SPY. VTI’s base returns have been slightly lower in the past five years, but when you consider these extras, they can have a big impact on a portfolio that you’ll be compounding for many decades.

Holdings breakdown:

Retirement ETFs: VTI holdings breakdown
Click to Enlarge
Source: Chart courtesy of GuruFocus.com

Vanguard Information Technology Index Fund ETF (VGT)

the word Source: shutterstock.com/Imagentle

The Vanguard Information Technology Index Fund ETF (NYSEARCA:VGT) tracks the MSCI US Investable Market Information Technology 25/50 Index. It is a tech-focused play that has been stable and consistent. Over the long run, it has outperformed the Invesco QQQ (NASDAQ:QQQ).

StockAnalysis states, “In the past year, QQQ returned a total of 31.46%, which is slightly higher than VGT’s 31.15% return. Over the past 10 years, QQQ has had annualized average returns of 18.42%, compared to 20.48% for VGT.” It also has a higher dividend yield. QQQ has a dividend yield of 0.57%, compared to the VGT’s 0.66% dividend yield. It also has half the expense ratio at 0.10% vs 0.20% for the QQQ.

I believe tech stocks will continue to drive most of the growth for the coming decades, especially with AI having a spillover effect on many industries. As such, having plenty of tech exposure is a smart idea.

Holdings breakdown:

VGT holdings breakdown
Click to Enlarge
Source: Chart courtesy of GuruFocus.com

JPMorgan Equity Premium Income ETF (JEPI)

JPM stock: the JPMorgan logo on top of a buildingSource: Shutterstock

This is a more income-focused ETF. It is a good pick if you have a lot of money and are close to retirement already. The total returns here are unlikely to match the other two ETFs on this list in the long run, but you’re getting a lot of ballast and a solid dividend yield at these levels.

The JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) is an actively managed fund that aims to generate income by selling options on U.S. large-cap stocks. The fund invests in S&P 500 stocks that exhibit low-volatility and value characteristics, selling options on those stocks to generate additional income.

The ETF aims to offer a hedge-fund strategy combined with lower volatility than the U.S. stock market. The upside and the downside are capped here to some extent due to how it operates. It has a 7.36% dividend yield and pays monthly. The expense ratio is a bit expensive at 0.35%, but JEPI is a solid income pick at these levels with plenty of upside.

Holdings breakdown:


Click to Enlarge
Source: Chart courtesy of GuruFocus.com

On the date of publication, Omor Ibne Ehsan did not hold (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.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

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The post 3 Retirement ETFs Every Investor Should Own appeared first on InvestorPlace.


14.

Want to Retire Rich? 2 ETFs to Buy Now and Hold for Decades

2024-06-08 09:05:00 by Joe Tenebruso, The Motley Fool from Motley Fool

Exchange-traded funds (ETFs) give investors an easy and low-cost way to spread their bets among hundreds and even thousands of companies, eliminating the need to try to find individual winning stocks. This broad-based diversification can help you reduce your risk while still allowing you to profit from powerful trends, such as the artificial intelligence (AI) boom.

Here are two ETFs that are particularly well constructed to deliver fortune-building gains to their shareholders in the years and decades ahead.

Here's how to profit from the growth of big tech and AI

The Invesco QQQ ETF (NASDAQ: QQQ) is designed to track the Nasdaq-100 index, which is comprised of the 100 biggest non-financial companies in the Nasdaq Composite. It's chock-full of tech titans, including the popular "Magnificent Seven" stocks, which are all among the fund's top holdings.

Company Share of Invesco QQQ ETF Funds Allocation
Microsoft 8.5%
Apple 8.1%
Nvidia 7.6%
Alphabet 5.5%
Amazon.com 5.1%
Meta Platforms 4.5%
Tesla 2.4%

Data source: Invesco.

These are some of the most powerful and profitable businesses on the planet. Their sizable representation within this Invesco ETF can provide your portfolio with a lucrative combination of proven performance and attractive long-term growth potential.

The ETF is also loaded with AI stocks outside of the Magnificent Seven that could have even better growth prospects. Chipmakers like Broadcom and Advanced Micro Devices and AI-powered cybersecurity leaders like Palo Alto Networks and CrowdStrike count among the fund's holdings.

Importantly, the fund has a reasonable expense ratio of 0.2%, which equates to a fee of just $2 per $1,000 invested annually. By keeping its fees low, the Invesco QQQ ETF offers you a simple and cost-effective way to profit from the growth of 100 of the largest and best companies within the tech- and AI-heavy Nasdaq Composite index.

This small-cap fund could turbocharge your returns

While size and strength are certainly advantages for many of the companies within the Nasdaq-100, there are other benefits to be had by owning stakes in smaller, faster-growing businesses. That's where the Vanguard Russell 2000 ETF (NASDAQ: VTWO) comes in.

The Vanguard Russell 2000 ETF can provide you with exposure to a broad array of small- and mid-cap stocks. It holds nearly 2,000 equities, with a median market capitalization of $3 billion. That contrasts starkly with the Invesco QQQ ETF, which has a weighted market cap of over $980 billion due to the outsize impact of the mega-cap companies it holds. These two ETFs thus pair nicely. Together, they can provide your portfolio with a wealth-building blend of larger stalwarts and smaller, high-potential upstarts.

Interestingly, the stocks held by the Vanguard Russell 2000 ETF currently trade at a steep discount to their larger rivals. The fund's weighted price-to-earnings (P/E) ratio of 15 is about 57% lower than the Invesco QQQ ETF's P/E of 35. This discount is one of the reasons why Fundstrat analyst Tom Lee thinks the Russell 2000 -- the index the Vanguard Russell 2000 ETF tracks -- could soar by 45% in 2024.

Interest rate cuts could also spark a rally in the Vanguard Russell 2000 ETF. With inflation moderating, the Federal Reserve is expected to begin reducing interest rates later this year. Small businesses tend to benefit more than larger companies when rates fall because they're able to obtain the growth financing they need on more attractive terms.

Better still, the Vanguard Russell 2000 ETF's annual expense ratio of only 0.1% will enable you to keep more of these potential gains for yourself, rather than paying them out as management fees.

Should you invest $1,000 in Vanguard Russell 2000 ETF right now?

Before you buy stock in Vanguard Russell 2000 ETF, 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 Vanguard Russell 2000 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $741,362!*

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 quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of June 3, 2024

Suzanne Frey, an executive at Alphabet, 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. 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. Joe Tenebruso has positions in Amazon. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, CrowdStrike, Meta Platforms, Microsoft, Nvidia, Palo Alto Networks, 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.


15.

3 ETFs That Are Screaming Buys in June

2024-06-08 07:37:00 by Jennifer Saibil, The Motley Fool from Motley Fool

Many investors understand the wisdom behind exchange-traded funds (ETFs). These investment vehicles provide the easy trading features and simplicity of a stock along with the diversification and flexibility that come with owning a professionally managed portfolio. ETFs offer access to large, yet focused, stock portfolios through a single ticker.

However, they're not all created equal. While one of the benefits of investing in ETFs is reduced risk, some ETFs are still quite risky. And while some ETFs might be secure investments, they won't maximize your investable money.

Then there are the ETFs that offer some level of security while also maximizing your potential gains. The Invesco QQQ Trust ETF (NASDAQ: QQQ), Vanguard Growth ETF (NYSEMKT: VUG), and Vanguard S&P 500 ETF (NYSEMKT: VOO) are three examples of funds in this category. Here's why you might want to buy them in June.

1. Invesco QQQ Trust: AI is leading the market's gains

The Invesco QQQ Trust ETF mirrors the Nasdaq-100, an index made up of 100 of the largest non-financial companies listed on the Nasdaq stock exchange. It has outperformed the broader market over time, and it soars when the market is doing well like it is now.

QQQ Total Return Level Chart
QQQ total return level data by YCharts.

Its top holdings are some of the largest tech companies in the world by market cap, and their stock prices have swelled now specifically due to heavy investments in artificial intelligence (AI) -- think Nvidia, Amazon, and Apple.

Investing in the QQQ Trust ETF diversifies your money across a small slice of top growth stocks, allowing you to benefit from a position in each of them. That way, if any one of them falters, the others can make up any losses.

2. Vanguard Growth ETF: Maximizing the market

The Vanguard Growth fund is more diversified than the QQQ Trust fund, but still heavily weighted toward large growth stocks. It mirrors the CRSP U.S. Large Cap Growth Index and has about 200 of the largest U.S.-based companies by market cap.

Its largest holdings are similar to QQQ Trust, but it isn't limited to Nasdaq-listed or nonfinancial stocks, so it also includes stock growth giants like Eli Lilly and Visa. Its broader diversification gives investors exposure to trends outside of tech and AI that they won't get in a Nasdaq-100 index fund.

It has also outperformed the market over many years.

^SPX Chart
^SPX data by YCharts.

This particular Vanguard ETF also has an ultra-low expense ratio of 0.04%. As the market continues to rise, owning shares of this ETF gives investors the opportunity to gain from trends across the board in the U.S. economy. Specifically, if the Federal Reserve does lower interest rates, that will be acutely felt in major financial stocks. That's why buying now could benefit shareholders as the year progresses.

3. Vanguard S&P 500 ETF: Buying the market

There's always the chance that unexpected occurrences will hurt the market -- so-called Black Swan events that economists can't forecast (a global pandemic is a great recent example). Even events that seemed bound to happen can't be accurately predicted.

Consider the current economy: It seems obvious that flooding the economy with stimulus money would lead to inflation, and then to higher interest rates. But the market didn't price that in when it skyrocketed in 2021. That turned into a bear market as a result and eventually rebounded but there is still some uncertainty out there. What happens next is anybody's guess.

That's why it's so safe to have some of your money in a standard S&P 500 index fund at any given time. The Vanguard S&P 500 ETF mirrors the full S&P 500, and investing in it gives you exposure to 500 top-level U.S. stocks on the market. It also has a super-low expense ratio of only 0.03%, the lowest on this list and low in comparison with similar ETFs.

This is what Warren Buffett recommends, and he puts his money where his mouth is, with not one but two different S&P 500 index funds in the Berkshire Hathaway equity portfolio.

With the economy still volatile, interest rates still high, and economists unsure about how it will all shake out, having some funds in an ETF that tracks the overall market is a recipe for a secure and growing long-term investment. Buying now will give you the chance to capture the current bull market growth.

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.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $741,362!*

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 quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of June 3, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, Nvidia, Vanguard Index Funds-Vanguard Growth ETF, Vanguard S&P 500 ETF, and Visa. The Motley Fool has a disclosure policy.


16.

US economy adds more jobs than expected in May as unemployment rate ticks higher

2024-06-07 13:26:40 by Josh Schafer from Yahoo Finance

The US labor market added more jobs than expected in May, defying previous signs of a slowdown in the economy.

Data from the Bureau of Labor Statistics released Friday showed the labor market added 272,000 nonfarm payroll jobs in May, significantly more additions than the 180,000 expected by economists. 

Meanwhile, the unemployment rate rose to 4% from 3.9% the month prior. May's job additions came in significantly higher than the 165,000 jobs added in April.

The print highlights the difficulty the Federal Reserve faces in determining when to lower interest rates and how quickly. Overall, the economy and labor market have held up, and inflation has remained sticky, building the case for holding rates higher for longer. Yet some cracks have emerged, such as signs of inflation pressuring lower-income consumers and rising household debt.

“They’re really walking a tightrope here,” Robert Sockin, Citi senior global economist, told Yahoo Finance of the central bank. He noted the longer the Fed holds rates steady, the more cracks could develop in the economy.

Wages, considered an important metric for inflation pressures, increased 4.1% year over year, reversing a downward trend in annual gains from the month prior. On a monthly basis, wages increased 0.4%, an increase from the previous month's 0.2% gain.

Read more: How does the labor market affect inflation?

"To see more confidence that inflation could move lower over time, you'd really like to see the wage numbers look a little lower than we've seen them today," Lauren Goodwin, New York Life Investments economist and chief market strategist, told Yahoo Finance.

Also in Friday’s report, the labor force participation rate slipped to 62.5% from 62.7% the month prior. However, participation among prime-age workers, ages 25-54, rose to 83.6%, its highest level in 22 years.

The largest job increases in Friday's report were in healthcare, which added 68,000 jobs in May. Meanwhile, government employment added 43,000 jobs, and leisure and hospitality added 42,000 jobs.

The report comes as the stock market has hit record highs amid a slew of softer-than-expected economic data, which had increased investor confidence that the Federal Reserve could cut interest rates as of September. After Friday's labor report, that trend reversed, with investors pricing in a 53% chance that the Fed cuts rates in September, down from a roughly 69% chance seen just a day prior, per the CME FedWatch Tool.

"We had been anticipating the start of rate cuts in September, totaling [two]cuts this year but the persevering strong employment gains raises the likelihood of later rate cuts," Nationwide chief economist Kathy Bostjancic wrote of today’s May employment report.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

LOS ANGELES, CALIFORNIA - JANUARY 25: An American flag flies from a crane as construction worker helps build a mixed-use apartment complex which will hold over 700 units of apartment housing and 95,000 square feet of commercial space on January 25, 2024 in Los Angeles, California. Economic data from the Commerce Department released today showed that U.S. economy expanded 3.1 percent in 2023, shaking off inflation fears and making the U.S. the fastest growing advanced economy in the world in 2023. (Photo by Mario Tama/Getty Images)
An American flag flies from a crane as a construction worker helps build a mixed-use apartment complex on Jan. 25, 2024, in Los Angeles, California. (Mario Tama/Getty Images)
Mario Tama via Getty Images

Other data out this week has reflected a still-resilient labor market that's showing further signs of normalizing to pre-pandemic levels. The latest Job Openings and Labor Turnover Survey (JOLTS), released Tuesday, showed job openings fell in April to their lowest level since February 2021. 

Notably, the ratio between the number of job openings and unemployed people returned to 1.2 in May, which is in line with pre-pandemic levels.

"We think employment growth is continuing at a solid pace, but there are ample signs that the heat in the labor market over the past few years largely has been removed," Wells Fargo senior economist Sarah House wrote in a note to clients on Friday.

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


17.

1 No-Brainer ETF to Buy Right Now for Less Than $500

2024-06-04 12:05:00 by Jake Lerch, The Motley Fool from Motley Fool

Ultimately it is not the stock market nor even the companies themselves that determine an investor's fate. It is the investor.

-- Peter Lynch, "One Up on Wall Street"

Investing is about making decisions. There are thousands of stocks and related products to choose from, and successful investing relies on making the right choices and sticking to a game plan.

That's why I'm fond of exchange-traded funds (ETFs). They offer the ability to easily invest in a basket of stocks, helping to diversify one's portfolio. What's more, many do all this at a low cost.

Let's look at one ETF that I believe is a no-brainer buy right now.

What is the Invesco QQQ Trust?

The Invesco QQQ Trust (NASDAQ: QQQ) is an ETF that tracks the Nasdaq 100, an index made up of the largest non-financial stocks listed on the Nasdaq exchange.

The ETF and underlying index are both heavily weighted to the technology sector, and the fund's top holdings include Microsoft, Nvidia, Apple, Amazon, and Meta Platforms.

How has the Invesco QQQ Trust performed?

Let's cut to the chase: This fund has been an outstanding investment. Over the last 20 years, the ETF has registered a total return of over 1,400%, equating to annual growth of 14.5%. An initial investment of $1,000 in 2004 would have grown to almost $15,200 today.

QQQ Total Return Level Chart
Data by YCharts.

Compare that to the S&P 500, which has generated a 10.2% annual total return over the same period. The Dow Jones Industrial Average also failed to keep up with a 9.2%  annual return, and the Russell 2000 index lagged even further behind with an 8.1% return.

QQQ Total Return Level Chart
Data by YCharts.

Over a long-term period like 20 years, those differences in annual returns add up to significant differences in the value of your investment.

Is the Invesco QQQ Trust a buy now?

The growth of technology and how it has changed the lives of billions of people is the story of our lifetime, and that narrative isn't going to change anytime soon.

As a result, technology companies will remain some of market's biggest winners for decades to come, but not all companies companies will thrive -- or even survive. That's one of the core advantages of investing in an index fund. The Invesco QQQ Trust holds 101 stocks, and this diversification allows winners to balance out any losers, helping the overall ETF grow over time.

In short, the Invesco QQQ Trust is a solid choice that is worthy of consideration for any investor who wants exposure to growth stocks in their portfolio.

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.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $671,728!*

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 quadrupled the return of S&P 500 since 2002*.

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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. Jake Lerch has positions in Amazon, Invesco QQQ Trust, and Nvidia. The Motley Fool has positions in and recommends Amazon, Apple, 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.


18.

Wall Street is having trouble getting 'too excited' about the US economy

2024-06-04 08:35:30 by Josh Schafer from Yahoo Finance

The US economy is no longer shocking Wall Street to the upside

Economic consensus has shifted from forecasters chasing the data higher to scaling back levels of optimism as recent data shows activity cooling across a variety of metrics. 

This has dampened hopes that economic growth could unexpectedly accelerate for a second straight year.

"I am having trouble getting too excited about the economy," Renaissance Macro head of economic research Neil Dutta wrote in a note to clients on Monday. 

"Conditions are fine, but I would hardly describe the situation as consistent with a meaningful acceleration."

The economics research team at Goldman Sachs, led by Jan Hatzius, has been among the most bullish on the state of the economy over the past year. But the firm moved down its estimate for second quarter GDP to reflect an annualized growth rate of 2.7% from 3.2% on May 24 amid "weak spending momentum to start the quarter."

Similarly, the Atlanta Fed's GDPNow tracker — which uses data inputs from throughout the quarter to extrapolate how GDP is pacing — has moved down to 1.8% after sitting above 4% at the beginning of May.

Dutta's Monday note followed a new reading of activity in the manufacturing sector from the Institute for Supply Management (ISM), which showed activity fell further into contraction last month. 

The ISM's manufacturing PMI registered a reading of 48.7 in May, down from a reading of 49.2 and lower than the 49.5 economists expected, according to Bloomberg data.

After entering expansion territory with a reading above 50 in March for the first time since 2022, the index has declined for the last two months.

"The drop in the ISM manufacturing index in May adds to the sense that the economy is losing momentum," Capital Economics North America economist Thomas Ryan wrote in a note to clients. 

The fall in PMIs is the latest economic data point to come in weaker than expected. 

In early May, the April jobs report showed US job growth came in weaker than expected as the unemployment rate unexpectedly ticked higher. A softer-than-projected reading on retail sales in April followed this report. In late May, a decline in the second estimate of first quarter economic growth was largely driven by lower consumption.

The stock market has taken any signs of a weakening economy in stride, with all three major indexes hitting record highs in May

The correlation between the Citi Economic Surprise index and the S&P 500 has been inching toward a negative correlation, meaning stock investors have been increasingly embracing bad economic news as good news for stocks.

Many view the current economic data as opening the door for Federal Reserve interest rate cuts while not signaling an outright downturn in economic activity. Lower rates and slower growth could still be a constructive environment for stocks.

Following the weak April jobs report, for instance, the S&P 500 rallied about 1.3%

Bank of America US and Canada equity strategist Ohsung Kwon wrote in a note on Monday that whether economic growth deteriorates further will be key, as "bad news can turn into bad news" for stocks too.

The next test for this narrative will come on Friday with the release of the May jobs report. 

The report is expected to show 185,000 nonfarm payroll jobs were added to the US economy last month, with unemployment holding steady at 3.9%, according to data from Bloomberg.

Kwon believes a print like this would keep the labor market tracking in the "Goldilocks" range — not too hot to fuel fears of sticky inflation and not too cold to heighten worries of a slowdown. 

With inflation still tracking lower, many Wall Street strategists also see room for stocks to rally if a slowing economy proves to be a head fake.

"Stronger growth should also be positive for stocks," Kwon said.

The sign for Wall Street is seen with US flags outside the New York Stock Exchange in New York on June 16, 2022. (Photo by Yuki IWAMURA / AFP) (Photo by YUKI IWAMURA/AFP via Getty Images)
The sign for Wall Street is seen with US flags outside the New York Stock Exchange in New York on June 16, 2022. (YUKI IWAMURA/AFP via Getty Images)
YUKI IWAMURA 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


19.

The stock market took a narrow road to record highs last month

2024-06-04 07:12:28 by Josh Schafer from Yahoo Finance

The broadening of the stock market rally fell by the wayside as the index reached record levels last month.

Just six large tech stocks contributed to more than 75% of the S&P 500's gain in May, a move reminiscent of how the "Magnificent Seven" tech stocks drove the market rally in 2023. 

Rises in Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), and Nvidia (NVDA) shares helped the S&P 500 (^GSPC) to its best May since 2003.

"We're seeing a relatively narrow market, and that narrowness has been increasing recently and really driven by fewer stocks," BMO Wealth Management US chief investment officer Yung-Yu Ma told Yahoo Finance. "That's not what you want to see for market health."

Participation from the other 493 stocks in the S&P 500 had been a feature of runs toward record highs in the last six months, including in late 2023 and near the end of the first quarter. In May, the S&P 500 rose about 4%, while the equal-weighted index was up less than 2%. In the first quarter of the year, the spread between these two indexes was closer to 0.5%.

But since stocks bottomed out after a 5% pullback in the S&P 500 that ended in mid-April, the market has once again been all about Big Tech. 

The Nasdaq Composite (^IXIC) posted its best May in over 20 years, led by nearly a 30% jump in Nvidia stock over the past month.

Bank of America investment strategist Michael Hartnett noted the relative price performance of the equal-weighted S&P 500 (^SPXEW) against the market-cap-weighted S&P 500 is at its worst level since March 2009 after a rebound last year. 

This narrow leadership has seen breadth — or the number of stocks advancing minus the number of stocks declining — fall toward the low end of its historical range. 

Data from Bespoke Investment Group published last Thursday showed breadth over the previous 10 trading days had fallen to the lowest decile of performance going back to 2002, meaning that over 90% of the time, the market sees more stocks participating in gains than what predominated in late May. 

The firm did note, however, that breadth at these levels often portends the strongest returns of any decile over the following three-, six-, and 12-month periods.  

Ned Davis Research chief US strategist Ed Clissold wrote in a note to clients that "several market breadth indicators" haven't followed the recent rally higher. 

This could be a point of concern if the narrow leadership from Big Tech over the last month falls off. According to Clissold, this sometimes happens when market rallies peak.

"The bottom line is that while some divergences have been developing all year, most only presented themselves in recent weeks," Clissold wrote. "If the market is in a topping process, it is likely in the beginning phases. Not enough evidence has changed to warrant adjusting our overweight recommendation to US stocks."

Nvidia logo is seen during Impact'24 congress in Poznan, Poland on May 16, 2024. (Photo by Jakub Porzycki/NurPhoto via Getty Images)
Nvidia logo is seen during Impact'24 congress in Poznan, Poland on May 16, 2024. (Jakub Porzycki/NurPhoto via Getty Images)
NurPhoto via Getty Images

In a note to clients on Monday, RBC Capital Markets head of US equity strategy Lori Calvasina called this recent action a "sudden stall" in the rotation trade, citing a few catalysts giving investors reason for concern.

A rise in Treasury yields has once again become a headwind for stocks, pushing many investors to lean on large-cap stocks. This also comes as the fundamental story has been most impressive for that group as well, with earnings being revised higher for large-cap tech stocks in recent weeks, Calvasina noted. 

These shifts have happened as the story of a resilient US economy that could grow more than expected this year has been taking hits. 

A reading on first quarter economic growth was revised lower during the last week of May, while the latest look at manufacturing activity from the Institute for Supply Management showed activity fell further into contraction last month.

And in describing what could revive the rotation trade, Calvasina wrote: "Our work suggests that the 10-year yield (^TNX) needs to stop rising, the market needs more clarity and certainty around the path of monetary policy and the timing of cuts, earnings trends need to improve for the broader market such that they look better than the biggest growth names, and economic excitement needs to return."

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


20.

New jobs report report kicks off new month of trading: What to know this week

2024-06-03 09:39:17 by Josh Schafer from Yahoo Finance

Stocks stumbled to end an otherwise positive month of May as investors appeared to press pause on AI enthusiasm and the prospect of the Federal Reserve holding interest rates higher for longer remained top of mind.

Over the past five trading sessions, the Nasdaq Composite (^IXIC) was near flat, and the S&P 500 (^GSPC) rose less than 0.2%. The Dow Jones Industrial Average (^DJI) was down nearly 1%.

In the week ahead, updates on the labor market will be front and center to start a fresh month of trading. The May jobs report is set for release on Friday morning while updates on job openings and private wage growth are also on the schedule. Readings on activity in the services and manufacturing sector are also expected.

In corporate news, quarterly results from CrowdStrike (CRWD), Lululemon (LULU), and Dollar Tree (DLTR) highlight an otherwise quiet week for company earnings releases.

The month of May ended with a moderately promising update on the inflation front. The April reading of the Personal Consumption Expenditures (PCE) index showed prices increased 0.2% from the month prior, the lowest monthly increase of 2024. 

While economists described this as "better news on inflation than we saw in the first quarter," it didn't do much to shift investors' interest rate cut expectations. Investors were pricing in less than two rate cuts this year, per Bloomberg data, little changed from the week prior.

This follows recent rhetoric from Federal officials that "greater confidence" will be needed in inflation's decline before starting to cut rates. 

A slew of data on the labor market will test investor sentiment on the Fed's path in the week ahead. 

The May jobs report is set for release on Friday, and economists expect it to tell a similar story to last month's report with the labor market cooling from its hot start to 2024 but not entering a downright slowdown. 

The report is expected to show that 185,000 nonfarm payroll jobs were added to the US economy last month, with unemployment holding steady at 3.9%, according to data from Bloomberg. In April, the US economy added 175,000 jobs while the unemployment rate ticked up slightly to 3.9%. 

Read more: How does the labor market affect inflation?

Construction workers carry equipments as they build the Nassau county International Cricket Stadium for the upcoming ICC Men's T20 World Cup in Eisenhower Park in East Meadow on May 1, 2024 in New York. Nassau County International Cricket Stadium under construction in Eisenhower Park in East Meadow, New York, ahead of the ICC T20 World Cup 2024. The newly-built Nassau County International Cricket Stadium, near New York, was launched on May 15, 2024 with the sport's world body
Construction workers working at the Nassau County International Cricket Stadium in New York.(YUKI IWAMURA/AFP via Getty Images)
YUKI IWAMURA via Getty Images

Wells Fargo's team of economists led by Jay Bryson wrote in a weekly note that strong job growth and upside inflation surprises to start the year led the Fed to "put its plans for rate cuts on hold until at least the second half of the year." 

But Wells Fargo expects the labor market to continue cooling from here on out

"Job growth came back down to Earth to start Q2. ... We think the pace of job growth over the next few months will look more like the April pace," Bryson's team wrote. 

Nvidia's (NVDA) blowout earnings helped spark a rise in the Nasdaq Composite had its best May since 2003. But that mood soured over the past week as earnings from Dell (DELL), Salesforce (CRM), and MongoDB (MDB), which have all been parts of the AI trade at times throughout the past year, failed to impress investors. 

"Off cycle reports this week highlight the pressure put on fundamentals and guidance to deliver given the valuation circumstance," Citi US equity strategist Scott Chronert wrote in a note, speaking broadly about the market action over the past week. "Pockets of the market may be reliant on a consistent beat and raise dynamic through the year to justify current prices."

Enthusiasm for AI, or lack thereof, will be a trend to watch over the next couple of weeks heading into Apple's Worldwide Developers Conference on June 10. 

The so-called "broadening" of the stock market rally, in which a wide variety of sectors rise, was a feature of stock market surges in late 2023 and, most recently, in March 2024. But it hasn't been on display in the market's latest climb to record highs. 

Bank of America investment strategist Michael Hartnett noted breadth is at its worst levels since 2009 when evaluating how closely the equal-weighted S&P 500 (^SPXEW) is moving with the market-cap-weighted S&P 500. Since the start of May, the S&P 500 is up more about 4%, while the equal-weighted index is up less than 2%. 

Ned Davis research chief US strategist Ed Clissold wrote in a note to clients that "several market breadth indicators" haven't followed the recent rally higher, which could be a point of concern if the narrow leadership from megacap tech over the last month falls off. This sometimes happens when market rallies peak, per Clissold. 

"The bottom line is that while some divergences have been developing all year, most only presented themselves in recent weeks," Clissold wrote. "If the market is in a topping process, it is likely in the beginning phases. Not enough evidence has changed to warrant adjusting our overweight recommendation to US stocks."

There is a potential upside to the lack of breadth too. Bespoke Investment Group highlighted that the current low breadth reading is actually often bullish for the market. With breadth at its current levels, stocks usually perform better than with any other breadth reading over the next three months, six months, and the full year. 

The key, of course, remains whether a broadening out actually taking place.

"If we don’t get a broadening of participation once again, then we could be retesting the [S&P 500] low that we saw on April 19," Sam Stovall, CFRA Research chief investment strategist, told Yahoo Finance. 

Weekly Calendar

Monday

Economic data: S&P Global US manufacturing, May final (50.9 prior); Construction spending month-over-month, April (0.2% expected, -0.2% prior); ISM Manufacturing, May (49.7 expected, 49.2 prior); ISM prices paid, May (60.9 expected);

Earnings: Gitlab (GTLB)

Tuesday:

Economic data: Job openings, April (8.3 million expected, 8.48 million prior); Factory orders, April (0.7% expected, 1.6% prior); Durable goods orders, April final (0.7% expected, 0.7% prior)

Earnings: Bath & Body Works (BBWI), CrowdStrike (CRWD), Hewlett Packard Enterprise (HPE), PVH (PVH), Stitch Fix (SFIX)

Wednesday

Economic data: MBA Mortgage Applications, week ended May 31 (-5.7%); ADP private payrolls, May (+174,000 expected, +192,000 prior); S&P global US Services PMI, May final (54.8 prior), S&P Global US composite PMI, May final (54.5 prior); ISM services index, May (50.9 expected, 49.4 prior); ISM services prices paid, May (59.2)

Earnings: Campbell's (CPB), ChargePoint (CHPT), Dollar Tree (DLTR), Five Below (FIVE) Lululemon (LULU), Victoria's Secret (VSCO)

Thursday

Economic data: Challenger jobs cuts, year-over-year, May (-3.3% prior); Unit labor costs, first quarter (+4.7 expected, +4.7% prior); Nonfarm productivity, first quarter (+0.3% expected, +0.3% prior); Initial jobless claims, week ending June 1 (219,000 prior)

Earnings: Big Lots (BIG), DocuSign (DOCU), Nio (NIO), Rent the Runway (RENT), The JM Smucker Company (SJM), Vail Resorts (MTN)

Friday

Economic calendar: Nonfarm payrolls, May (+185,000 expected, +175,000 prior); Unemployment rate, May (3.9% expected, 3.9% previously); Average hourly earnings, month-over-month, May (+0.3% expected, +0.2% prior); Average hourly earnings, year-over-year, May (+3.9% expected, +3.9% prior); Average weekly hours worked, May (34.3 expected, 34.3 prior); Labor force participation rate, May (62.7% previously)

Earnings: No notable earnings.

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


21.

ETFs Pulled in $87B in May, Almost Triple April's Total

2024-06-02 00:12:26 by Sumit Roy from etf.com

ETFs Pulled in $87B In May, Almost Triple April's Total

ETFs continued to swallow up assets in May as investors added $87.4 billion to the space, nearly triple the previous month's total.

Money poured in as U.S. stocks hit new highs last month: The S&P 500 jumped 5%, breaching 5,300 for the first time. April flows totaled $31.2 billion.

With five months in the books, U.S.-listed ETFs have pulled in a net $317.7 billion in fresh cash, well ahead of last year’s $146.8 billion pace.

While certainly large and impressive, nothing about May's inflows was particularly surprising. U.S. equity ETFs picked up the lion’s share of new assets—$51.6 billion—followed by U.S. fixed income ETFs at $17.4 billion and international equity ETFs at $13.1 billion.

On a year-to-date basis, the ordering is the same: U.S. equity ETFs are in the lead with $174.7 billion of inflows, followed by U.S. fixed income ETFs at $68.1 billion and international equity ETFs at $43.3 billion.

May’s top inflows list was chock-full of the usual low cost, broad market ETFs. The Vanguard S&P 500 ETF (VOO), the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ) each picked up more than $5.6 billion of new assets during the month, while the nearly $2 billion of inflows for the iShares iBoxx USD High Yield Corporate Bond ETF (HYG) was the most for any fixed income fund.  

On the other hand, the JPMorgan Alerian MLP Index ETN (AMJ), the Direxion Daily Semiconductor Bull 3X Shares (SOXL), and the iShares Russell 2000 ETF (IWM) topped the outflows list, with redemptions of more than $2 billion each.

For a full list of the top inflows and outflows for May, as well as 2024 as a whole, see the tables below:

Top Gainers May 2024

Ticker Name Issuer Net Flows ($, mm) AUM ($, mm) % of AUM YTD 2024 Net Flows($,M)
VOO Vanguard 500 Index Fund Vanguard 7,978.58 453,550.90 1.76 39,554.44%
SPY SPDR S&P 500 ETF Trust State Street Global Advisors 7,798.29 529,324.41 1.47 -18,045.98%
QQQ Invesco QQQ Trust Invesco 5,693.82 272,718.45 2.09 15,409.06%
IVV iShares Core S&P 500 ETF Blackrock 4,688.00 460,837.00 1.02 17,091.28%
VTI Vanguard Total Stock Market ETF Vanguard 2,249.99 393,954.69 0.57 12,940.15%
BNDX Vanguard Total International Bond ETF Vanguard 2,053.20 55,398.98 3.71 2,453.21%
HYG iShares iBoxx USD High Yield Corporate Bond ETF Blackrock 1,987.72 16,582.84 11.99 -2,212.21%
QQQM Invesco NASDAQ 100 ETF Invesco 1,690.77 26,066.51 6.49 5,150.20%
SPLG SPDR Portfolio S&P 500 ETF State Street Global Advisors 1,641.84 36,822.50 4.46 7,966.56%
BND Vanguard Total Bond Market ETF Vanguard 1,629.92 106,287.56 1.53 5,230.31%



 

Top Gainers (Year-to-Date)

Ticker Name Issuer Net Flows ($, mm) AUM ($, mm) % of AUM June 2024 Net Flows($,M)
VOO Vanguard 500 Index Fund Vanguard 39,554.44 453,550.90 8.72 7,978.58%
IVV iShares Core S&P 500 ETF Blackrock 17,091.28 460,837.00 3.71 4,688.00%
IBIT iShares Bitcoin Trust Blackrock 16,480.55 19,480.71 84.60 1,002.13%
QQQ Invesco QQQ Trust Invesco 15,409.06 272,718.45 5.65 5,693.82%
VTI Vanguard Total Stock Market ETF Vanguard 12,940.15 393,954.69 3.28 2,249.99%
AGG iShares Core U.S. Aggregate Bond ETF Blackrock 9,212.71 106,946.49 8.61 1,153.54%
FBTC Fidelity Wise Origin Bitcoin Fund Fidelity 8,765.33 10,935.90 80.15 611.29%
SPLG SPDR Portfolio S&P 500 ETF State Street Global Advisors 7,966.56 36,822.50 21.64 1,641.84%
DYNF BlackRock U.S. Equity Factor Rotation ETF Blackrock 7,511.46 8,063.90 93.15 242.43%
VUG Vanguard Growth ETF Vanguard 6,621.98 126,609.47 5.23 1,190.82%



 

Biggest Losers (May 2024)

Ticker Name Issuer Net Flows ($, mm) AUM ($, mm) % of AUM YTD 2024 Net Flows($,M)
AMJ JPMorgan Alerian MLP Index ETN JPMorgan Chase -2,785.53 563.68 -494.17 -2,816.24%
SOXL Direxion Daily Semiconductor Bull 3X Shares Direxion -2,469.42 11,014.37 -22.42 -2,270.30%
IWM iShares Russell 2000 ETF Blackrock -2,045.25 58,045.97 -3.52 -9,364.15%
TQQQ ProShares UltraPro QQQ ProShares -1,428.72 22,000.39 -6.49 -3,743.21%
XLE Energy Select Sector SPDR Fund State Street Global Advisors -964.21 37,768.11 -2.55 -1,204.35%
IYR iShares U.S. Real Estate ETF Blackrock -681.65 2,834.89 -24.04 -1,288.26%
XLK Technology Select Sector SPDR Fund State Street Global Advisors -581.82 66,719.60 -0.87 1,522.24%
GBTC Grayscale Bitcoin Trust ETF Digital Currency Group, Inc. -567.94 19,281.09 -2.95 -17,682.15%
EWJ iShares MSCI Japan ETF Blackrock -563.66 15,981.59 -3.53 1,220.00%
VNQ Vanguard Real Estate ETF Vanguard -533.85 30,866.41 -1.73 337.49%



 

Biggest Losers (Year-to-Date)

Ticker Name Issuer Net Flows ($, mm) AUM ($, mm) % of AUM June 2024 Net Flows($,M)
SPY SPDR S&P 500 ETF Trust State Street Global Advisors -18,045.98 529,324.41 -3.41 7,798.29%
GBTC Grayscale Bitcoin Trust ETF Digital Currency Group, Inc. -17,682.15 19,281.09 -91.71 -567.94%
IWM iShares Russell 2000 ETF Blackrock -9,364.15 58,045.97 -16.13 -2,045.25%
USMV iShares MSCI USA Min Vol Factor ETF Blackrock -4,073.24 23,755.65 -17.15 -142.04%
TQQQ ProShares UltraPro QQQ ProShares -3,743.21 22,000.39 -17.01 -1,428.72%
TFLO iShares Treasury Floating Rate Bond ETF Blackrock -3,370.18 7,012.66 -48.06 25.16%
IWD iShares Russell 1000 Value ETF Blackrock -3,306.58 54,545.40 -6.06 203.29%
GLD SPDR Gold Trust State Street Global Advisors -2,900.63 62,679.77 -4.63 17.39%
AMJ JPMorgan Alerian MLP Index ETN JPMorgan Chase -2,816.24 563.68 -499.61 -2,785.53%
LQD iShares iBoxx USD Investment Grade Corporate Bond ETF Blackrock -2,776.68 27,592.13 -10.06 -500.00%



 

Asset Classes (May 2024)

  Net Flows ($, mm) AUM ($, mm) % of AUM
Alternatives 188.15 7,728.83 2.43%
Asset Allocation 412.17 18,275.50 2.26%
Commodities -299.20 144,481.62 -0.21%
Currency 1,772.52 61,913.59 2.86%
International Equity 11,259.36 1,495,574.73 0.75%
International Fixed Income 7,326.49 198,729.34 3.69%
Inverse 1,654.98 14,166.87 11.68%
Leveraged -3,904.08 98,121.83 -3.98%
U.S. Equity 51,592.24 5,538,608.73 0.93%
U.S. Fixed Income 17,361.54 1,380,970.51 1.26%
Total: 87,364.19 8,958,571.55 0.98%



 

Asset Classes (Year-to-Date)

  Net Flows ($, mm) AUM ($, mm) % of AUM
Alternatives 922.34 7,728.83 11.93%
Asset Allocation 568.93 18,275.50 3.11%
Commodities -4,756.54 144,481.62 -3.29%
Currency 14,101.58 61,913.59 22.78%
International Equity 43,338.09 1,495,574.73 2.90%
International Fixed Income 24,163.11 198,729.34 12.16%
Inverse 785.30 14,166.87 5.54%
Leveraged -4,229.66 98,121.83 -4.31%
U.S. Equity 174,746.60 5,538,608.73 3.16%
U.S. Fixed Income 68,074.67 1,380,970.51 4.93%
Total: 317,714.42 8,958,571.55 3.55%



 

May 2024 ETF Brand League Table

Brand AUM ($, mm) Net Flows ($, mm) % of AUM YTD 2024 Net Flows($,M)
iShares 2,703,995.25 895.45 0.03% 37,489.66
Vanguard 2,525,465.95 19,072.26 0.76% 84,593.01
SPDR 1,268,131.75 -16,998.51 -1.34% -19,286.59
Invesco 501,321.99 5,039.48 1.01% 26,087.74
Schwab 335,369.27 1,430.40 0.43% 6,159.17
JPMorgan 147,616.53 3,867.17 2.62% 14,246.77
First Trust 136,346.15 -22.43 -0.02% 964.19
Dimensional 134,612.25 3,358.93 2.50% 12,485.58
VanEck 77,459.15 -650.82 -0.84% 4,272.57
WisdomTree 77,166.85 179.97 0.23% 2,198.05
Fidelity 69,262.91 2,843.26 4.11% 13,817.64
ProShares 67,310.73 -1,553.35 -2.31% -5,925.42
Global X 47,073.66 1,173.34 2.49% 3,184.40
Pacer 43,992.42 1,939.58 4.41% 7,176.07
Avantis 40,559.52 1,100.58 2.71% 5,225.34
Direxion 39,530.18 1,286.94 3.26% 119.15
Goldman Sachs 33,824.89 -51.74 -0.15% -192.24
PIMCO 26,289.45 1,206.48 4.59% 2,665.25
FT Vest 25,968.53 1,185.05 4.56% 4,115.83
Capital Group 25,952.69 1,495.61 5.76% 5,763.22
BlackRock 21,587.30 585.70 2.71% 8,767.87
FlexShares 20,922.12 -114.20 -0.55% -687.71
Xtrackers 20,873.40 -52.33 -0.25% -65.08
Grayscale 18,688.09 -2,548.05 -13.63% -17,114.69
Innovator 18,303.20 180.62 0.99% 232.61
Franklin 16,057.05 526.72 3.28% 1,432.24
Janus Henderson 15,935.56 1,249.97 7.84% 3,938.10
ARK 14,610.55 -580.86 -3.98% -178.56
REX Microsectors 9,106.87 33.77 0.37% 187.64
Nuveen 8,912.06 -7.13 -0.08% -107.20
Amplify 8,889.69 57.95 0.65% -510.22
Alerian 8,726.80 113.64 1.30% 358.77
abrdn 7,864.99 150.21 1.91% 197.18
VictoryShares 7,700.70 76.93 1.00% 150.30
PGIM 7,500.26 407.97 5.44% 899.17
KraneShares 7,351.88 -175.73 -2.39% -120.09
John Hancock 6,521.45 16.46 0.25% 112.01
BNY Mellon 5,873.31 84.43 1.44% 311.99
Hartford 4,709.41 81.64 1.73% -123.18
ALPS 4,638.87 48.75 1.05% 592.85
US Benchmark Series 4,574.90 275.57 6.02% 525.84
Simplify 4,141.55 132.44 3.20% 982.30
Principal 4,018.50 40.90 1.02% 167.08
IndexIQ 4,004.75 -27.00 -0.67% -129.98
GraniteShares 3,746.80 140.19 3.74% 1,764.97
Invesco DB 3,736.02 133.34 3.57% -56.99
Alpha Architect 3,669.47 696.80 18.99% 1,997.01
T. Rowe Price 3,586.20 160.46 4.47% 902.85
American Century 3,039.75 -68.41 -2.25% 53.79
US Commodity Funds 2,895.00 -37.64 -1.30% -341.43
ActivePassive 2,843.53 1,651.41 58.08% 1,981.44
BondBloxx 2,823.98 124.54 4.41% 320.89
Columbia 2,801.69 131.75 4.70% 603.11
AB Funds 2,697.43 173.46 6.43% 1,224.05
Allianz 2,627.12 220.74 8.40% 606.50
YieldMax 2,573.93 519.76 20.19% 1,454.82
Sprott 2,481.06 49.36 1.99% 31.71
Cambria 2,466.23 -344.41 -13.96% 229.65
Main Funds 2,296.01 22.87 1.00% 126.28
Putnam 2,292.37 130.81 5.71% 336.06
Bitwise 2,287.83 229.31 10.02% 1,775.53
Aptus 2,188.43 266.54 12.18% 367.53
Distillate 1,885.49 41.60 2.21% 206.92
Eagle 1,875.86 81.98 4.37% 93.34
Neos 1,778.00 352.21 19.81% 957.43
AdvisorShares 1,767.87 67.00 3.79% 377.48
Volatility Shares 1,631.06 312.73 19.17% 1,286.90
Harbor 1,620.16 81.47 5.03% 278.27
Inspire 1,533.82 16.72 1.09% 38.22
Motley Fool 1,516.06 -0.95 -0.06% 31.75
ROBO Global 1,491.60 -15.82 -1.06% -48.21
Vident 1,478.17 -7.08 -0.48% 8.48
Virtus 1,456.18 56.81 3.90% 301.91
Defiance 1,422.71 11.01 0.77% 132.40
US Global 1,408.23 -19.54 -1.39% -484.40
Strive 1,400.73 57.23 4.09% 235.97
Eaton Vance 1,378.50 249.24 18.08% 811.38
Bridgeway 1,364.37 31.34 2.30% 137.98
SEI 1,235.14 1.44 0.12% 1,076.71
Davis 1,152.96 24.06 2.09% 33.46
DoubleLine 1,110.33 42.56 3.83% 191.65
iM 1,063.16 56.77 5.34% 220.20
Kovitz 1,036.27 -2.28 -0.22% 18.52
ETRACS 1,029.12 0.00 0.00% 0.00
Roundhill 980.34 29.20 2.98% 212.94
Neuberger Berman 979.59 78.49 8.01% 178.85
CCM 963.05 5.76 0.60% 791.90
Meridian 901.41 18.10 2.01% 35.11
Freedom 888.49 0.93 0.11% 19.26
SP Funds 868.05 55.68 6.41% 206.53
Timothy 866.25 -0.11 -0.01% 7.36
Strategy Shares 857.65 -18.43 -2.15% -89.96
iPath 830.54 -88.57 -10.66% -85.52
SoFi 824.51 23.91 2.90% 86.51
T-Rex 803.81 70.89 8.82% 717.49
HCM 765.26 2.25 0.29% 50.83
TCW 736.93 -3.99 -0.54% -127.40
Angel Oak 708.74 57.07 8.05% 387.22
RPAR 703.49 -14.22 -2.02% -18.61
AXS Investments 699.82 17.69 2.53% 6.64
Day Hagan 695.15 -24.44 -3.52% -21.62
Quadratic 695.08 -106.82 -15.37% -200.89
Horizon 686.84 -3.30 -0.48% -56.75
CoinShares 651.86 -7.02 -1.08% 525.85
Tortoise 597.02 53.73 9.00% -28.61
Gotham 594.72 29.26 4.92% 31.99
GMO 590.44 158.46 26.84% 524.52
Bahl & Gaynor 589.63 20.69 3.51% 67.81
LeaderShares 564.95 -132.03 -23.37% -237.59
Calvert 553.08 18.17 3.29% 59.77
The Brinsmere Funds 547.16 0.18 0.03% 17.56
Cabana 541.45 -34.29 -6.33% 54.48
Credit Suisse 529.48 5.24 0.99% -14.16
InfraCap 527.41 -4.42 -0.84% 18.94
Wahed 517.09 23.73 4.59% 97.00
Monarch 446.19 14.72 3.30% 206.68
Brookstone 445.34 12.20 2.74% 48.97
FCF Advisors 441.55 -12.76 -2.89% 21.71
Oneascent 416.65 7.77 1.86% 59.79
ClearBridge 394.88 4.50 1.14% 28.25
ClearShares 391.83 0.00 0.00% -14.31
AAM 379.99 17.37 4.57% 65.38
EMQQ 376.22 -11.30 -3.00% -48.92
Nationwide 373.84 -8.13 -2.17% -52.16
Touchstone 372.61 23.32 6.26% 53.63
Barclays 368.06 18.14 4.93% 35.09
Matthews 348.71 0.47 0.13% -5.34
Vert 340.36 5.62 1.65% 16.54
Panagram 336.79 41.24 12.25% 108.42
Bushido 336.08 3.77 1.12% 17.98
CastleArk 327.17 -0.06 -0.02% -14.40
Overlay Shares 308.42 -12.10 -3.92% -79.04
Opus Capital Management 300.61 40.36 13.43% 67.63
Teucrium 296.21 -13.66 -4.61% -28.60
Adaptive 293.42 2.44 0.83% 2.68
TrueShares 293.24 12.50 4.26% 47.78
FundX 292.91 2.89 0.99% 0.86
USCF Advisers 289.76 5.80 2.00% 8.50
Natixis 278.87 8.20 2.94% 176.50
AGF 268.38 28.10 10.47% 19.06
Congress 266.46 32.84 12.33% 142.25
Tidal ETFs 262.49 6.96 2.65% 2.69
Return Stacked 262.07 22.19 8.47% 125.66
Max 251.90 33.25 13.20% 133.72
Madison 249.18 -2.38 -0.96% -6.95
Swan 245.65 10.86 4.42% 29.25
Brandes 243.44 27.78 11.41% 136.36
STF 225.91 2.28 1.01% 3.33
Burney 225.72 2.14 0.95% 4.60
Anfield 224.39 -3.42 -1.52% -9.56
Mohr Funds 222.63 -13.08 -5.88% -26.59
PlanRock 222.26 -30.64 -13.79% 98.18
Federated Hermes 221.45 14.39 6.50% 90.71
Fairlead 211.57 1.31 0.62% -4.44
RiverFront 197.97 -3.50 -1.77% -8.19
UBS 194.72 0.00 0.00% 0.00
CornerCap 193.10 -0.54 -0.28% 0.69
REX 191.65 40.22 20.98% 178.92
Little Harbor Advisors 189.17 -5.42 -2.86% -8.19
Summit Global Investments 188.56 -1.33 -0.71% -33.86
WBI Shares 186.68 -4.23 -2.27% -9.17
Saba 183.50 6.05 3.30% 18.51
SRH 183.18 0.05 0.03% 0.05
Syntax 180.57 0.00 0.00% -9.21
Euclidean 180.07 0.00 0.00% 0.61
Renaissance 177.15 -5.47 -3.09% -31.40
Zacks 170.94 38.26 22.38% 73.39
BrandywineGLOBAL 170.04 -1.27 -0.75% -3.91
Core Alternative 170.04 -33.03 -19.42% -71.61
Adasina 167.70 0.00 0.00% 15.25
Rayliant 165.05 37.21 22.54% 41.54
Agility Shares 161.48 -2.13 -1.32% 3.46
Thrivent 151.40 -4.92 -3.25% -18.22
Gadsden 148.73 -0.63 -0.42% -0.97
Beyond 145.53 -0.84 -0.58% -4.07
ROC 144.13 10.47 7.26% 59.53
Ballast 140.22 1.88 1.34% 17.24
Siren 139.82 1.63 1.16% -1.44
Segall Bryant & Hamill 139.49 18.15 13.01% 77.63
Humankind 137.02 0.00 0.00% 0.02
Knowledge Leaders Capital 132.27 0.00 0.00% -2.15
American Beacon 127.27 0.88 0.69% 27.56
SoundWatch Capital 125.76 0.00 0.00% 1.91
Tema 121.79 4.65 3.82% 55.06
Donoghue Forlines 119.34 -0.53 -0.44% 3.42
Polen 116.35 16.17 13.90% 78.44
Hennessy 114.38 -3.37 -2.94% 52.19
Applied Finance 113.18 7.12 6.29% 32.04
DB 106.88 0.00 0.00% -2.06
Strategas 105.87 3.81 3.60% 0.36
Rareview Funds 103.91 0.86 0.83% 6.90
FPA 102.86 12.67 12.31% 43.13
Hoya 101.99 3.50 3.43% 11.06
Conductor Fund 99.87 -2.58 -2.59% -5.56
Impact Shares 96.70 1.82 1.88% -0.08
Subversive 94.46 16.49 17.45% 72.59
MarketDesk 92.91 0.00 0.00% 0.00
First Manhattan 89.74 0.28 0.31% 0.72
ACV 84.78 3.94 4.65% -0.33
Leuthold 84.67 0.82 0.97% 4.97
Absolute 84.64 0.74 0.88% 1.50
Q3 84.42 1.96 2.32% 11.37
Convergence 83.40 10.23 12.26% 42.48
ERShares 82.12 0.00 0.00% 1.52
Astoria 81.97 1.98 2.42% 6.90
Alexis 80.07 0.27 0.34% 2.92
ArrowShares 79.01 1.08 1.36% -1.47
Faith Investor Services 75.74 0.27 0.36% 15.56
Keating 74.48 12.51 16.80% 12.51
Altshares 74.45 1.39 1.86% 3.40
Spear 72.37 0.24 0.34% 54.52
CrossingBridge Funds 70.83 -0.86 -1.21% 1.70
Hilton 68.12 10.74 15.77% 49.36
F/m 67.82 -1.97 -2.91% 40.62
Sterling Capital 66.36 1.46 2.19% 2.98
IDX 66.05 4.42 6.70% 17.92
  64.54 42.91 66.48% 65.42
Logan 63.11 0.00 0.00% -1.01
Parametric 62.89 -5.12 -8.14% 15.99
Alger 62.50 6.99 11.18% 9.26
Nicholas 61.74 0.46 0.75% 10.30
Sphere 59.45 0.00 0.00% -2.97
EA Series Trust 58.97 2.55 4.33% 9.91
Cambiar Funds 58.62 1.16 1.97% 1.49
Miller 58.44 1.89 3.24% 16.94
Regents Park 57.29 0.00 0.00% -6.81
Adaptiv 56.45 0.56 0.99% -1.10
Argent 55.12 1.33 2.41% 6.19
Breakwave 54.24 -4.87 -8.98% -11.51
Formidable 53.32 -0.60 -1.12% -3.68
NETL 51.78 -6.86 -13.25% -8.54
Academy 51.47 0.49 0.95% 0.99
SmartETFs 51.25 0.00 0.00% -1.33
THOR 49.47 0.53 1.08% -2.58
Goose Hollow 48.85 -0.68 -1.38% -7.32
McElhenny Sheffield 48.78 2.39 4.90% 6.56
Texas Capital 48.27 0.50 1.03% 24.52
Western Asset 47.80 0.00 0.00% -8.03
SonicShares 46.98 0.00 0.00% 6.27
River1 45.25 45.66 100.90% 45.66
Acquirers Fund 45.22 1.85 4.10% 0.85
Hull 44.51 0.78 1.75% 4.64
Leatherback 43.60 0.67 1.55% -4.46
Obra 41.56 1.40 3.37% 1.40
UVA 41.51 0.00 0.00% -2.20
Regan 40.98 3.16 7.70% 39.54
Discipline Funds 40.50 1.34 3.31% 3.79
Gabelli 39.85 0.67 1.69% 4.13
Aztlan 38.81 -10.51 -27.08% -12.12
Sovereign's 37.46 1.38 3.68% 8.13
Foundations 37.34 -1.64 -4.39% 32.80
India 37.22 2.30 6.17% 22.04
Range 36.93 -4.83 -13.09% 20.83
Carbon Collective 36.60 10.47 28.60% 14.24
ZEGA 35.94 -6.36 -17.70% -13.45
AOT 35.74 0.35 0.98% 3.17
Sound Income Strategies 35.68 2.28 6.40% 4.12
Bancreek 35.27 5.96 16.90% 29.26
Sparkline 34.98 1.40 4.00% 3.33
Meet Kevin 34.70 -3.74 -10.78% -6.42
QRAFT 34.29 5.44 15.85% 7.79
Procure 34.19 -0.80 -2.35% -2.49
Calamos 34.10 1.92 5.64% 14.78
North Shore 32.84 32.86 100.06% 32.86
Trajan 32.77 -0.54 -1.64% -2.50
RAM 32.71 0.81 2.48% 2.35
Innovative Portfolios 32.14 0.00 0.00% -0.48
Martin Currie 32.00 0.00 0.00% -1.56
Affinity 31.90 0.00 0.00% 0.00
AlphaMark 31.82 0.00 0.00% 1.47
Validus 31.50 0.00 0.00% 0.00
Cultivar 30.78 0.51 1.65% 0.00
Counterpoint 30.57 3.43 11.22% 14.03
Guru 29.77 -2.98 -10.02% -6.16
Pinnacle 28.39 3.37 11.88% 7.61
Themes 26.88 0.19 0.72% 19.29
FMQQ 26.13 1.20 4.61% 4.92
Tactical Funds 25.99 0.43 1.65% 1.69
WealthTrust 24.88 0.77 3.09% 6.36
Clough 23.74 0.69 2.92% 6.96
Veridien 23.58 0.00 0.00% 0.57
PMV 22.82 0.27 1.18% -1.33
Alternative Access 22.56 4.99 22.12% 9.99
Clockwise Capital 22.15 1.29 5.84% 3.08
Vesper 21.68 0.00 0.01% -7.18
MUSQ 21.39 2.00 9.33% 6.48
Point Bridge Capital 21.29 0.00 0.00% 0.00
Bridges 20.49 1.10 5.38% 1.11
Westwood 19.79 19.67 99.39% 19.67
Tuttle 19.64 7.91 40.29% 18.25
GGM 19.38 0.27 1.39% 4.01
Mairs & Power 18.80 -0.21 -1.14% 0.90
DGA 17.86 0.00 0.00% 0.52
Macquarie 15.93 0.00 0.00% 0.00
Relative Sentiment 15.43 0.56 3.60% 1.37
Ionic 14.47 0.00 0.00% 1.45
Robinson 14.28 -1.53 -10.72% -3.58
ATAC 14.23 -0.43 -2.99% -0.78
The Future Fund 13.37 0.00 0.00% 1.13
Grizzle 13.09 -0.59 -4.52% -2.02
LAFFER TENGLER 11.96 1.32 10.99% 3.99
Hashdex 11.53 1.62 14.07% 2.50
Morgan Dempsey 10.06 -0.47 -4.68% -5.42
Performance Trust 8.98 8.99 100.06% 8.99
RiverNorth 8.69 0.00 0.00% -0.78
Nifty 8.11 0.00 -0.01% 0.88
CoreValues Alpha 7.71 0.00 0.00% 0.00
Democracy 7.59 0.00 -0.02% 0.00
Build 7.49 -1.16 -15.50% -9.77
Altrius 6.86 0.00 0.00% -0.33
Acruence 6.46 -0.39 -5.99% -24.11
Cullen 6.37 0.00 -0.01% 5.06
ETFB 6.35 0.00 0.00% -0.47
MKAM 6.31 0.00 0.00% 0.27
StockSnips 6.24 6.19 99.11% 6.19
CRIT 6.16 3.82 61.97% 3.64
Kurv 5.83 0.91 15.67% 2.19
Dynamic 5.82 -1.39 -23.97% -1.39
VegTech 5.69 0.00 0.00% 0.00
Armada ETF Advisors 5.49 0.00 0.00% -0.94
Brendan Wood 5.48 0.93 17.05% 1.55
IQ Funds 5.13 -0.55 -10.81% -0.55
Honeytree 4.65 0.00 0.00% 1.44
Blue Horizon 4.52 -0.55 -12.15% -0.55
ICE BofAML 4.51 0.00 0.00% 0.00
iMGP 4.09 0.27 6.71% 2.69
USCF 4.02 0.00 0.00% 0.00
Reverb ETF 4.01 0.00 0.00% 0.00
North Square 3.38 0.00 0.00% 0.00
Hypatia Capital 3.07 -0.30 -9.77% -0.29
Jacob 2.92 0.00 0.00% 0.00
Newday 2.91 0.00 0.00% 0.00
KP Funds 2.65 0.00 -0.04% 0.00
Vest 2.57 -2.47 -96.04% -2.47
Arch Indices 2.13 0.00 0.00% 1.57
WHITEWOLF 2.02 0.00 0.00% 0.57
Akros 1.90 0.00 0.00% 0.23
Langar 1.86 0.00 0.00% 1.62
Kingsbarn 1.71 0.00 0.00% -0.57
iREIT 1.46 0.00 0.00% 1.49
Optimize 1.02 1.00 97.72% 1.00
DriveWealth 0.76 0.00 0.00% 0.00
Cboe Vest 0.75 0.00 0.00% 0.62
Onefund 0.00 0.00 0.00% 0.00
AllianzIM 0.00 0.00 0.00% 0.00
Tremblant 0.00 0.00 0.00% 0.00
Peak 0.00 0.00 0.00% 0.00



 

June 2024 ETF Issuer League Table

Issuer AUM ($, mm) Net Flows ($, mm) % of AUM YTD 2024 Net Flows($,M)
Blackrock 2,793,384.22 20,180.58 0.72% 66,438.10
Vanguard 2,593,810.48 20,846.26 0.80% 105,439.27
State Street Global Advisors 1,300,920.79 10,580.47 0.81% -8,706.12
Invesco 531,420.80 10,122.92 1.90% 36,153.67
Charles Schwab 342,160.87 2,449.49 0.72% 8,608.67
AJM Ventures LLC 165,979.44 1,243.59 0.75% 6,323.61
JPMorgan Chase 152,479.34 3,749.66 2.46% 17,996.43
Dimensional Holdings 139,292.31 2,833.49 2.03% 15,319.07
VanEck 80,263.98 48.43 0.06% 4,321.00
WisdomTree 78,883.62 940.79 1.19% 3,138.84
Fidelity 73,984.11 2,293.00 3.10% 16,110.64
ProShares 71,507.61 299.99 0.42% -5,625.43
Mirae Asset Global Investments Co., Ltd. 48,648.98 1,133.70 2.33% 4,323.30
American Century Investments 45,256.05 1,128.17 2.49% 6,407.29
Pacer Advisors 43,615.06 446.43 1.02% 7,622.50
Direxion 39,603.38 -3,034.90 -7.66% -2,915.75
Goldman Sachs 34,261.79 -202.75 -0.59% -394.99
PIMCO 29,469.37 469.98 1.59% 3,741.72
The Capital Group Companies 28,935.06 2,584.18 8.93% 8,347.40
DWS 21,769.36 455.87 2.09% 388.72
Northern Trust 20,595.68 -401.47 -1.95% -1,089.17
Digital Currency Group, Inc. 19,287.95 -567.94 -2.94% -17,682.63
Innovator 18,707.11 66.44 0.36% 299.05
Janus Henderson 17,546.36 1,570.37 8.95% 5,508.48
Franklin Templeton 17,384.78 470.45 2.71% 1,917.43
ARK Investment Management LP 14,616.49 27.68 0.19% -170.06
SS&C 13,383.97 207.28 1.55% 1,150.71
Alpha Architect 10,357.99 598.76 5.78% 3,866.28
Nuveen Securities 9,888.10 711.44 7.19% 604.23
BMO 9,794.97 55.21 0.56% 376.57
Amplify Investments 8,982.52 59.86 0.67% -450.35
Abrdn Plc 8,359.65 85.28 1.02% 282.46
CICC 8,336.58 104.90 1.26% -216.08
Toroso Investments 8,088.48 749.03 9.26% 2,778.02
Victory Capital Holdings, Inc. 7,835.68 124.72 1.59% 275.02
Prudential 7,747.92 218.07 2.81% 1,117.24
John Hancock 6,595.64 32.89 0.50% 144.89
BNY Mellon 6,000.27 33.37 0.56% 345.36
1251 Capital Group Inc. 5,026.39 383.60 7.63% 950.07
GraniteShares 5,007.41 90.12 1.80% 1,855.09
The Hartford 4,775.18 9.42 0.20% -113.76
T. Rowe Price Group, Inc. 4,676.29 993.90 21.25% 1,896.75
Simplify Asset Management Inc. 4,456.28 302.96 6.80% 1,285.26
Principal 4,195.74 82.09 1.96% 249.18
New York Life 4,025.70 -9.95 -0.25% -140.48
Exchange Traded Concepts 3,967.11 -24.87 -0.63% 40.58
Columbia Management Investment Advisers, LLC 2,995.98 161.35 5.39% 764.45
US Commodity Funds 2,989.30 -332.59 -11.13% -665.52
Envestnet 2,988.06 93.12 3.12% 2,074.57
Bondbloxx Investment Management LLC 2,986.33 163.35 5.47% 484.24
Equitable Holdings 2,836.55 102.93 3.63% 1,326.98
Sprott, Inc. 2,750.34 86.10 3.13% 117.82
Cambria 2,555.15 92.44 3.62% 322.09
Bitwise Asset Management, Inc. 2,493.96 163.67 6.56% 1,960.54
Power Corporation of Canada 2,434.63 103.00 4.23% 439.06
Main Management 2,387.75 36.37 1.52% 162.65
Aptus Capital Advisors 2,214.64 132.53 5.98% 583.41
Morgan Stanley 2,044.71 36.49 1.78% 923.62
Neos Investments LLC 2,036.41 244.31 12.00% 1,201.73
Virtus Investment Partners 2,009.55 76.71 3.82% 398.76
Eagle Capital Management LLC 1,901.17 -14.53 -0.76% 78.81
Distillate Capital 1,861.65 6.93 0.37% 213.84
Volatility Shares LLC 1,858.70 132.10 7.11% 1,419.00
UBS 1,828.23 71.58 3.92% 57.42
ORIX 1,779.66 115.76 6.50% 394.03
AdvisorShares 1,644.78 42.85 2.61% 420.33
The Motley Fool 1,562.02 3.93 0.25% 35.69
Inspire Impact Group LLC 1,551.12 6.64 0.43% 44.86
MM VAM LLC 1,480.71 -12.78 -0.86% -4.30
Defiance ETFs 1,454.97 10.08 0.69% 131.46
Barclays Capital Inc. 1,344.89 160.31 11.92% 109.88
SEI Investments 1,309.15 41.57 3.18% 1,118.28
US Global Investors 1,245.67 -103.76 -8.33% -588.17
Eurazeo SA 1,207.89 15.58 1.29% 316.91
Davis Advisers 1,170.71 0.01 0.00% 33.47
Doubleline ETF Holdings LP 1,118.76 6.56 0.59% 198.21
Focus Financial Partners 1,046.32 9.98 0.95% 28.50
Neuberger Berman 975.38 -15.29 -1.57% 163.56
Roundhill Investments 915.52 73.45 8.02% 219.46
Tuttle Tactical Management, LLC 913.25 -79.23 -8.68% 659.11
Rational Advisors Inc. 851.88 -10.52 -1.23% -100.47
Timothy Plan 848.27 -17.15 -2.02% -9.79
The TCW Group, Inc. 846.75 23.08 2.73% -104.32
Howard Capital Management, Inc. 833.88 20.02 2.40% 70.86
Coinshares International Ltd. 773.55 64.96 8.40% 590.81
Angel Oak Cos. LLC 748.12 38.59 5.16% 425.82
Grantham, Mayo, Van Otterloo & Co. LLC 727.42 126.91 17.45% 651.43
Horizon Kinetics LLC 689.03 1.58 0.23% -55.18
Day Hagan Asset Management 683.14 -25.01 -3.66% -46.64
SR Partners LLC 662.58 -23.71 -3.58% -14.14
Tortoise 597.38 4.18 0.70% -24.43
Bahl & Gaynor, Inc. 595.76 7.97 1.34% 75.78
Sausalito Partners LLC 575.82 8.07 1.40% 33.21
Redwood Investment Management 558.16 -7.03 -1.26% -244.62
Estate Counselors LLC 555.12 0.79 0.14% 18.35
Wahed Invest LLC 542.66 9.57 1.76% 106.56
Aptus Holdings LLC 496.86 -0.89 -0.18% -10.05
Truemark Group 481.70 173.01 35.92% 220.01
CI Financial Corp. 462.59 12.34 2.67% 90.83
Kingsview Partners LLC 458.89 9.33 2.03% 216.02
AmeriLife Group LLC 451.65 2.05 0.45% 51.02
Oneascent Holdings LLC 438.44 16.20 3.69% 75.99
Sun Life Financial 413.74 31.59 7.63% 96.96
Eldridge Industries LLC 395.49 57.24 14.47% 165.66
Western & Southern Mutual Holding Co. 390.53 13.53 3.47% 67.17
David Young & Sandra G. Glain Family Trust 386.62 28.40 7.35% 44.83
ClearShares LLC 386.17 -10.04 -2.60% -24.35
Nationwide 374.26 -13.12 -3.51% -65.28
Matthews International Capital Management 361.53 7.07 1.96% 1.73
Vert Asset Management LLC 351.52 8.63 2.45% 25.17
CastleArk Management LLC 349.68 -0.05 -0.01% -14.45
Liquid Strategies 321.78 4.73 1.47% -74.31
Cavalier16 315.00 3.40 1.08% 6.07
Teucrium 309.04 -6.00 -1.94% -34.60
Natixis 304.26 16.67 5.48% 193.17
Lagan Holding Co. Trust 302.34 28.12 9.30% 170.37
Summit Global LLC 287.59 3.66 1.27% -30.20
Brandes Worldwide Holdings 277.80 34.23 12.32% 170.59
PlanRock Wealth Management LLC 277.70 52.77 19.00% 150.95
Swan Global Investments 251.70 1.21 0.48% 30.46
Madison Investment Holdings 247.91 0.00 0.00% -6.95
Federated Hermes, Inc. 239.33 18.05 7.54% 108.76
Stf Management LP 237.22 0.00 0.00% 3.33
REX Shares LLC 235.12 36.96 15.72% 215.88
Retireful LLC 222.14 -2.61 -1.18% -29.21
AGF 221.50 -50.74 -22.91% -31.68
Cary Street Partners Financial LLC /VA/ 205.98 -6.81 -3.31% -11.26
Little Harbor Advisors 193.12 -0.59 -0.31% -8.78
CornerCap Investment Counsel, Inc. 190.88 -0.01 -0.01% 0.67
Renaissance Capital 186.93 1.35 0.72% -30.05
The Greenwood Trust 184.42 10.74 5.82% 84.13
Syntax Advisors 183.15 3.23 1.76% -5.98
Paralel Technologies LLC 180.55 0.02 0.01% 0.07
WBI 179.71 -5.84 -3.25% -15.00
Toews Corp. 175.18 9.80 5.59% 13.26
Rayliant Investment Research 168.69 0.22 0.13% 41.76
Core Alternative Capital 166.09 0.56 0.34% -71.05
Thrivent Financial for Lutherans 161.35 8.03 4.98% -10.19
Running Oak Capital LLC 158.88 14.05 8.84% 73.57
Applied Finance Group 154.37 37.72 24.44% 69.77
Calamos Family Partners 146.24 107.80 73.71% 122.58
Humankind USA LLC 138.28 -0.03 -0.02% -0.01
Inverdale Capital Management LLC 138.22 1.85 1.34% 19.10
SRN Advisors 134.91 -6.88 -5.10% -8.32
Dawn Global Topco Ltd. 134.67 12.62 9.37% 67.68
Soundwatch Capital LLC 128.85 0.00 0.00% 1.91
Intangible Capital 127.82 -6.68 -5.22% -8.82
Optimize Financial Inc. 121.70 118.96 97.75% 119.96
Community Capital Management, Inc. 116.23 0.05 0.04% 0.89
First Pacific Advisors LP 113.21 6.54 5.78% 49.67
Subversive LLC 110.61 11.72 10.59% 84.30
Hennessy Advisors 110.20 -1.60 -1.45% 50.60
Baird Financial Group 109.52 2.52 2.30% 2.88
Neil Azous Revocable Trust 106.89 1.17 1.09% 8.07
IronHorse Holdings 106.49 4.28 4.02% -1.28
Pettee Investors 103.79 4.19 4.03% 15.25
Convergence Investment Partners, LLC 99.01 11.87 11.99% 54.35
Tremblant Capital 95.13 23.38 24.57% 23.38
Beyond Investing 93.94 0.00 0.00% 3.36
Resolute Investment Managers, Inc. 91.94 15.71 17.09% 43.27
First Manhattan Co. 90.87 0.00 0.00% 0.72
Ridgeline Research LLC 90.52 4.02 4.44% 3.68
Absolute Investment Advisers LLC 85.73 0.75 0.87% 2.24
The Leuthold Group LLC 85.46 -0.02 -0.02% 4.95
Q3 Asset Management Corp. 84.24 0.31 0.37% 11.68
EntrepreneurShares, LLC 83.49 0.00 0.00% 1.52
Alexis Investment Partners LLC 82.25 0.28 0.35% 3.20
Arrow Funds 79.23 0.00 0.00% -1.47
Faith Investor Services, LLC 76.89 0.00 0.00% 15.56
Water Island Capital Partners LP 75.36 0.80 1.06% 4.20
OBP Capital LLC 74.34 -0.41 -0.55% -5.10
Spear Advisors LLC 74.21 0.00 0.00% 54.52
Cohanzick Management 69.77 -1.29 -1.85% 0.40
Client First Investment Management LLC 69.68 9.37 13.45% 8.27
Alger Associates Inc 68.62 2.88 4.19% 12.14
IDX Advisors LLC 67.99 0.64 0.94% 18.56
Logan Capital Management Inc. 65.42 0.45 0.68% -0.57
Truist 64.24 -0.69 -1.07% 2.29
GeaSphere LLC 60.93 0.00 0.00% -2.97
Miller Value Partners LLC 58.86 0.45 0.77% 17.39
Cambriar Holdings 58.31 -0.01 -0.02% 1.48
Hull Investments LLC 57.46 11.21 19.51% 15.85
Sammons Enterprises, Inc. 54.31 0.00 0.00% 0.00
Goose Hollow Capital Management LLC 52.83 3.29 6.22% -4.03
Formidable Asset Management 52.12 0.00 0.00% -3.68
Infrastructure Capital Advisors 51.95 0.00 0.00% -1.20
Guinness Atkinson Asset Management 50.90 -1.83 -3.60% -3.16
Regan Capital, LLC 50.54 9.47 18.74% 49.01
Thor Analytics LLC 49.83 0.52 1.05% -2.06
Texas Capital Bancshares, Inc. 48.32 0.00 0.00% 24.52
ETF Series Solutions 46.26 0.90 1.95% 1.75
Sound Capital Solutions LLC 45.87 -0.55 -1.20% 45.11
ETFMG 45.28 -7.39 -16.33% -18.90
Impact Shares 45.00 0.00 -0.01% -1.85
ShariaPortfolio, Inc. 43.74 0.00 0.00% 20.06
Westwood Holdings Group, Inc. 41.97 19.90 47.42% 39.57
GAMCO Investors, Inc. 41.92 0.82 1.96% 4.95
Obra Capital, Inc. 41.87 0.00 0.00% 1.40
Clough Capital Partners LLC 40.26 13.90 34.51% 20.86
Sovereign's Capital Management LLC 38.20 0.28 0.73% 8.41
Counterpoint Mutual Funds LLC 37.06 5.00 13.50% 19.03
Split Rock Private Trading & Wealth Management LLC 34.30 0.49 1.42% 33.34
Belpointe Asset Management, LLC 34.27 19.51 56.94% 19.51
Reflection Asset Management, LLC 34.09 0.01 0.02% 2.35
ProcureAM 34.01 -1.59 -4.67% -4.08
AlphaMark Advisors 32.04 -0.16 -0.50% 1.31
Sheaff Brock Capital Management LLC 31.96 -0.46 -1.45% -0.95
Cultivar Capital, Inc. 30.21 0.00 0.00% 0.00
ETP Holdings 30.19 3.05 10.10% 22.34
WealthTrust Asset Management LLC 27.23 1.06 3.89% 7.42
PMV Capital LLC 25.13 1.87 7.44% 0.54
Clockwise Capital LLC 22.68 -0.67 -2.95% 2.41
Alternative Access Funds LLC 22.60 0.00 0.00% 9.99
Macquarie Group Ltd 21.91 0.75 3.42% 0.75
Point Bridge Capital 20.91 0.00 0.00% 0.00
Grant/GrossMendelsohn LLC 20.24 0.49 2.44% 4.51
Mairs & Power, Inc. 18.58 0.00 0.00% 0.90
Future Fund Advisors 13.83 0.00 0.00% 1.13
Cboe Vest Financial LLC 10.56 6.98 66.11% 5.14
Public Trust Advisors LLC 10.48 1.50 14.34% 10.49
Carbon Collective Investing LLC 10.07 0.00 0.00% 10.01
Kurv Investment Management LLC 8.52 2.74 32.20% 4.94
Cullen Capital Management LLC 8.11 1.92 23.72% 6.99
Power Financial Corp. 7.71 0.00 0.00% 0.00
Democracy Investment Management LLC 7.69 0.00 0.01% 0.00
Build Asset Management LLC 7.50 0.00 0.00% -9.77
Dynamic Shares LLC 5.97 0.00 0.00% -1.39
VegTech LLC 5.83 0.00 0.00% 0.00
Distribution Cognizant LLC 4.12 0.00 0.00% 0.00
X-Square Capital 3.38 0.00 0.00% 0.00
Hypatia Capital Group LLC 3.09 0.00 -0.02% -0.29
Jacob Asset Management of New York LLC 2.73 -0.31 -11.33% -0.31
Otter Creek Advisors LLC 2.34 1.49 63.53% 1.49
Arch Indices Investment Advisors LLC 2.14 0.00 -0.12% 1.57
Langar Investment Management LLC 1.89 0.00 0.00% 1.62
Kingsbarn Capital Management LLC 1.70 0.00 0.00% -0.57
DriveWealth LLC 0.78 0.00 0.00% 0.00
Ot Advisors LLC 0.00 0.00 0.00% 20.22
Peakshares LLC 0.00 0.00 0.00% 0.00
Milliman, Inc. 0.00 0.00 0.00% 0.00
Copper Place Global Capital LLC 0.00 0.00 0.00% -5.20
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.

Forget the Nasdaq -- Buy This Magnificent ETF Instead

2024-05-30 09:55:00 by James Brumley, The Motley Fool from Motley Fool

Even investors who only keep casual tabs on the stock market probably know most of its recent gains have been driven by Nasdaq-listed stocks such as Microsoft and Nvidia. Indeed, all seven of the so-called "Magnificent Seven" stocks leading the charge throughout the past few years are Nasdaq names. This dynamic makes an exchange-traded fund (ETF) like the Invesco QQQ Trust (NASDAQ: QQQ) a compelling prospect, since it's built to mirror the Nasdaq-100 index, which means it holds a sizable stake in all seven of these market-beating tickers.

However, before diving into such a pick because it's overloaded with a particular exchange's hottest listings, consider an alternative that might make more sense to step into at this time. The Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP) sidesteps almost all of the problems the Invesco QQQ Trust poses to investors right now.

The Invesco QQQ Trust's unique imbalance risk

An exchange-traded fund is simply a basket of stocks with at least one common characteristic.

In the case of the Invesco QQQ Trust, this common element is the fact that each of these names is a constituent of the Nasdaq-100 index. These are (for the most part) the Nasdaq Composite's biggest 100 companies as measured by market cap. It's an attractive investment option simply because these baskets make it easy for investors to achieve diversification with a single trade. As their name suggests, exchange-traded funds are bought and sold just like individual stocks.

There's an arguable built-in design flaw with ETFs meant to mirror an index, however. That's the ease with which an index or a corresponding fund can become poorly balanced when a small handful of its stocks reap the lion's share of the market's gains.

The Nasdaq-100 index and the Invesco QQQ Trust are certainly guilty of this problem right now. Because a small number of their underlying holdings -- like the aforementioned Microsoft and Nvidia -- have performed so incredibly well since the middle of 2020, these tickers are now overrepresented within the index. For perspective, Microsoft now accounts for nearly 9% of the index's total value, while Apple makes up 8%. Nvidia's 6.5% of the Nasdaq-100's and the QQQ Trust's value, while Amazon isn't far behind at a little more than 5%. All told, the Magnificent Seven stocks alone make up roughly one-third of the Nasdaq-100's total value. That's not exactly diversified. And that's after the Nasdaq-100 underwent a special rebalancing completed in the middle of last year specifically to address the problem of the Magnificent Seven's overheated performance.

It's a problem simply because these seven stocks tend to rise and fall together. As a group, they're now ripe for some serious profit-taking. This dynamic sets the stage for a degree of bearish pressure that may not be felt by most other stocks.

The Invesco S&P 500 Equal Weight ETF's advantage

The Invesco S&P 500 Equal Weight ETF is different in a couple of ways.

One of these ways is the deeper diversification it offers. Not only does it hold names beyond the Nasdaq's-100 biggest listings, but it's also got considerably more sector-based diversification. Indeed, its greatest sector exposure is to industrial stocks at 16% of its holdings, with financial being its second-biggest group at 14%.

The fund's most important nuance is, however, that it doesn't allow any single stock to ever become too much of its underlying portfolio. The index's and the ETF's managers rebalance these 500 holdings every quarter to bring them all back to just 0.2% of the fund's total value.

In some regards, this premise and strategy can be counterintuitive. Generally speaking, you want to let your very best winners run for as long as they're able to do so. Constantly rebalancing these holdings cuts off your exposure to the S&P 500's best-performing names.

On balance though, the underlying idea provides more long-term upside than not.

See, not only are equal-weighted funds less volatile than their cap-weighted counterparts -- making them easier to own -- they also often outperform their benchmark indexes simply because they hold more exposure to smaller companies. Although the market's mega-caps have become markedly bigger in recent years and outperformed smaller companies' stocks in the process, this is the exception to the norm rather than the norm. More often than not it's the smaller, nimbler players that are better positioned to capitalize on new opportunities.

An automated rebalancing approach also sidesteps another stumbling block associated with cap-weighted ETFs and indexes. That's momentum bias, or bullish interest in a particular stock solely because of its recently bullish performance. This bias can prove especially problematic in the latter stages of an expansion cycle when valuations are already stretched thin and headed into what will likely be a rough patch for the market. It's a particular problem for overextended, high-profile stocks though, which by that point are often over-owned by too many investors who aren't entirely committed to them.

When rebalancing has been taking place for the whole time leading up to that scenario, however, there is no such bias posing an undue risk.

It pays to be proactive rather than reactive

The biggest Nasdaq-listed names may well continue to outperform, keeping the Invesco QQQ Trust out in front of other ETFs. Smaller companies may continue underperforming, weighing on the Invesco S&P 500 Equal Weight ETF performance since it's more exposed to these tickers.

Just bear in mind that by the time it becomes obvious you should make such a strategic switch it's often too late to bother doing so.

Bottom line? If the idea that the Nasdaq's biggest names can't lead the way forever makes sense to you, the time to act is before it seems like you absolutely have to. This is one of those scenarios where it makes sense to be a little too early than even just a little bit too late, in fact. If that time isn't now, then it's certainly soon.

Should you invest $1,000 in Invesco Exchange-Traded Fund Trust - Invesco S&P 500 Equal Weight ETF right now?

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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. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, 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.


23.

The ETF Elite: 7 Funds That Consistently Crush the Market

2024-05-29 20:30:00 by Marc Guberti from InvestorPlace

Investors don’t have to pick the best stocks to outperform the market. Some exchange-traded funds can do it for them. These funds have specified objectives that may align with your financial goals. Investors who want to retire soon may aim for an income-oriented ETF. However, investors who want higher returns may gravitate toward growth ETFs.

Wondering which ETFs give you a better chance of outperforming the stock market? These ETF elites have delivered in the past, and it looks like they can continue to thrive.

Invesco QQQ Trust Series 1 (QQQ)

Invesco logo in blue with mountain imageSource: Shutterstock

Invesco QQQ Trust Series 1 (NASDAQ:QQQ) gives investors exposure to the Nasdaq-100. That means investors get plenty of exposure to mega cap tech companies. The fund also has a large concentration in the technology industry.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

QQQ has generated 369% more returns than the S&P 500 since its inception in 1999. It’s also outperformed the S&P 500 in nine of the past 10 years. Investing $10,000 in this fund a decade ago would have resulted in a $55,055 portfolio. 

The ETF continues to perform well as artificial intelligence pushes many tech companies to all-time highs. It’s up by 14% year-to-date and has gained an impressive 163% over the past five years. QQQ only has a 0.20% expense ratio and comes with a 35 P/E ratio.

Most Wall Street analysts are feeling optimistic about QQQ. The fund has 87 “Buy” ratings and “15 “Hold” ratings, giving it a consensus “Moderate Buy” rating. The average price target implies an 11% gain from current levels.

Vanguard S&P 500 ETF (VOO)

vanguard website displayed on a mobile phone screen representing vanguard etfsSource: Shutterstock

You don’t have to beat the market to reach your long-term financial goals. Following a broad index like the S&P 500 can work out too, and the Vanguard S&P 500 ETF (NYSEARCA:VOO) puts that theory to the test.

VOO is up by 12% year-to-date and has gained 92% over the past five years. The 4-star fund also has an annualized return of 12.84% over the past ten years. It follows the 500 largest publicly traded corporations. The S&P 500 has several stipulations in place to limit which companies can enter the index. For instance, companies must be profitable to make it on the famed index.

The Vanguard S&P 500 ETF follows the popular index while offering a 30-day SEC yield of 1.36%. More than a quarter of the fund’s total assets are in the Information Technology sector. Financials are the second largest sector with 13.10% of the fund’s total assets.

Schwab U.S. Large-Cap Growth ETF (SCHG)

charles schwab sign outside of a building. SCHD stockSource: Isabelle OHara / Shutterstock.com

The Schwab U.S. Large-Cap Growth ETF (NYSEARCA:SCHG) uses the Dow Jones U.S. Large-Cap Growth Total Stock Market Index as its benchmark. The fund prioritizes large-cap U.S. equities and has the Magnificent Seven stocks filling its top positions. SCHG has been around since 2009 and has $28.5 billion in assets under management

The fund has a reasonable 0.04% expense ratio, which means you’ll keep most of your gains. Speaking of gains, the fund has produced plenty of them over the years. A 17% year-to-date gain and a 5-year gain of 146% are enough to draw investors’ attention, but the long-term picture is even more optimistic.

The Schwab U.S. Large-Cap Growth ETF has an annualized return of 15.08% over the past 15 years. That historical return and the 250 holdings in the ETF have made it a 5-star Morningstar fund. Analysts have rated the fund as a “Strong Buy” with a projected 12% upside.

Vanguard Growth Index Fund (VUG)

Illustration of a woman sitting on top of an hourglass next to a calculator that says index fund.Source: Creativa Images / Shutterstock

The Vanguard Growth Index Fund (NYSEARCA:VUG) also has a “Strong Buy” rating and a projected 12% upside. More than 170 of the 201 analysts believe the stock is a “Buy.” It doesn’t have any “Sell” ratings.

This growth ETF has a 0.04% expense ratio and a 30-day SEC yield of 0.47%. The yield alone is enough to cover the expense ratio, and the fund has strong returns to make it worthwhile. It has an annualized return of 15.30% over the past five years and 15.08% over the past 15 years.

VUG prioritizes large-cap growth stocks and has the Magnificent Seven stocks among its top holdings. Technology is the biggest sector and consists of almost half of the fund’s assets. Consumer Cyclical is a distant second, comprising of14.86% of the fund’s total assets. Basic Materials, Real Estate, Energy, and Utilities each have less than 2% of the fund’s total assets.

Invesco S&P 500 Top 50 ETF (XLG)

Illustration of an ETF in multiple sectors.Source: SWKStock / Shutterstock

Have you ever wondered if focusing on the best of the best will lead to better results? The people behind the Invesco S&P 500 Top 50 ETF (NYSEARCA:XLG) took this question to heart. This fund only has the Top 50 S&P 500 stocks rather than all 500 of them. It’s a good spin on Pareto’s Principle which states that 80% of the restyle comes from 20% of the holdings.

It’s worked out quite well for investors. XLG is up by 16% year-to-date and has gained 120% over the past five years. Just like most of the other top-performing ETFs, most of XLG’s assets are allocated toward the Magnificent Seven. The fund has a 0.20% expense ratio and a 30-day SEC yield of 0.89%.

XLG currently has a “Strong Buy” rating among 54 analyst ratings. Only six analysts rated it as a “Hold” and none of them rated the fund as a “Sell.” The average price target suggests a 12% upside from current levels.

Vanguard Mega Cap Growth Index Fund ETF (MGK)

Blocks spelling out index funds. best tech fundsSource: Dmitry Demidovich / Shutterstock

The Vanguard Mega Cap Growth Index Fund ETF (NYSEARCA:MGK) has $18.1 billion in assets under management and prioritizes mega-cap stocks like the Magnificent Seven. The fund has a 0.07% expense ratio and impressive long-term returns.

The fund has had a 12.34% annualized return over the past decade, and it’s still been performing well in recent years. It’s up by 16% year-to-date and has gained 143% over the past five years. MGK offers exposure to 79 stocks and trades at a 36 P/E ratio. More than half of the fund’s total assets are allocated toward tech stocks. Consumer Discretionary is in second place with 21.60% of the fund’s total assets. Industrials (7.00%) and Health Care (6.90%) are the only two other sectors worth mentioning for this fund.

MGK is rated as a “Strong Buy” among 81 analysts. Only 11 analysts rated the fund as a “Hold” while every other analystgave it a “Buy” rating. The average price target implies a 13% upside from current levels.

iShares Russell 1000 ETF (IWB)

close-up of the phrase Source: shutterstock.com/bangoland

The iShares Russell 1000 ETF (NYSEARCA:IWB) gives investors exposure to 1,000 domestic stocks and prioritizes large and mid-cap corporations. It has a 0.15% expense ratio and has delivered a 90% return over the past five years. The fund is also up by 11% year-to-date.

IWB is also a solid performer over lengthier time horizons. The fund has an annualized return of 14.66% over the past 15 years. Although the fund offers exposure to many stocks, the Magnificent Seven stocks once again take up the top spots in the fund. However, there isn’t as much concentration in those stocks compared to other funds. That’s probably why the fund is doing well but doesn’t have 5-year returns as high as most of the other funds on this list.

Almost 30% of the fund’s total assets are allocated toward Information Technology stocks. Financials and Health Care make up a combined 25% of the fund’s total positions. Most sectors have some representation in this fund. Utilities has the lowest concentration, but its 2.31% position is still higher than other growth funds.

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 ETF Elite: 7 Funds That Consistently Crush the Market appeared first on InvestorPlace.


24.

The S&P 500 Hit Another Record High Last Week, but These 2 ETFs Have Outperformed the Index Over the Past Decade

2024-05-29 12:30:00 by Geoffrey Seiler, The Motley Fool from Motley Fool

The S&P 500 index has been hitting new record highs recently. This is great news as mutual funds and exchange-traded funds (ETF) that track the index are widely held by investors. Index ETFs are a great way for beginners and even more experienced investors to gain market exposure. They offer instant diversification, take little research effort, and are generally low cost.

The other great thing about ETFs that track market-cap-weighted indexes like the S&P 500 is that these funds have no emotions. They let their winners run and become a larger part of the index and their losers fall and become a smaller part. This is the exact opposite of what many investors do, which is to take profits in their winning stocks and dollar-cost average into their losers.

Investing in the S&P 500 has proven to be a great strategy leading to solid returns over the long term. However, if you are looking for even better returns, there are two market-cap-weighted index ETFs that have outperformed the S&P 500 index over the past 10 years.

Vanguard S&P 500 Growth ETF

The Vanguard S&P 500 Growth ETF (NYSEMKT: VUG) tracks the growth subset of the S&P 500 index and owns about 200 stocks. The ETF's top 10 holdings are similar to those of the S&P 500 index, except it does not hold Berkshire Hathaway.

The biggest difference, though, is that its top 10 holdings are a much larger percentage of its portfolio, making up nearly 55% of the fund. By comparison, the top 10 holdings of the S&P 500 index are less than a third of the total index's weighting. This means that the top holdings in the S&P 500 Growth ETF are playing a much bigger role in how the ETF performs.

This ETF is heavily weighted toward technology stocks, with over 56% of the ETF invested in the sector, followed by 19% in consumer discretionary stocks. Notably, a number of companies that are classified as consumer discretionary are very tech-oriented, such as Amazon and Tesla.

Over the past 10 years, the Vanguard S&P 500 Growth ETF has nicely outperformed the S&P 500, generating an average annual return of 14.6% versus 12.4% for the index.

Invesco QQQ ETF

Another fund that has outperformed the the S&P 500 by an even greater percentage is the Invesco QQQ ETF (NASDAQ: QQQ), which tracks the Nasdaq 100 index. Its top holdings are similar to those of the Vanguard S&P 500 Growth ETF, although it doesn't include some New York Stock Exchange-listed stocks such as Eli Lilly and Visa.

The fund is also very much tech weighted, with nearly 60% of its portfolio in the sector and another nearly 18% in consumer discretionary stocks.

This ETF has been a huge winner over the past decade, producing an annual average return of 18.1%. That easily outpaces the performance of the Vanguard S&P 500 Growth ETF and the S&P 500 index. Invesco boasts that the ETF has outperformed the S&P 500 index 87% of the time over the past decade.

A $10,000 investment in the Invesco QQQ ETF 10 years ago would be worth over $55,000 as of the end of March. And the same investment 20 years ago would be worth a whopping $145,436.

Wall Street street sign in front of the New York Stock Exchange.
Image source: Getty Images

Technology leads the way

The one big thing that both the Vanguard S&P 500 Growth ETF and the Invesco QQQ ETF have in common is that they are both more heavily weighted toward technology stocks than the S&P 500 index. And the fact is that technology is consistently changing the world, and technology companies as a result have become the biggest winners.

With the advent of artificial intelligence (AI), this trend likely won't slow down and may only continue to accelerate. That means there is a good chance that these two ETFs will also outperform the S&P 500 index over the next 10 years as well.

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.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $697,878!*

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 quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of May 28, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Berkshire Hathaway, Tesla, Vanguard Index Funds - Vanguard Growth ETF, and Visa. The Motley Fool has a disclosure policy.

.


25.

A 'robust' earnings outlook is driving further optimism for stocks in 2024

2024-05-29 08:07:13 by Josh Schafer from Yahoo Finance

The outlook for the stock market's most important driver just keeps getting better.

S&P 500 (^GSPC) earnings grew 6% in the first quarter from a year ago, according to data from FactSet. When excluding dismal earnings from Bristol Myers Squibb (BMY), the results were even better, with earnings growing 10%, per Bank of America. 

This comes as earnings estimates for future quarters are on the rise too. Consensus now sees earnings growing 11.4% in 2024, up from a projection of 10.9% on April 5. For 2025, earnings growth estimates have moved up to 14.2% from the 11.6% growth seen that day. 

On Tuesday, UBS Investment Bank US equity strategist Jonathan Golub boosted his year-end S&P 500 target to 5,600 from 5,400, citing "stronger earnings."

"While subsequent quarter earnings estimates typically decline during earnings season, [second quarter] estimates have also been quite robust," Golub wrote. "A similar pattern is also evident in full year 2024 estimates. These trends all support further market upside."

Earnings are one of several reasons Wall Street strategists have been boosting their S&P 500 year-end targets. Golub and others have noted that economic "tail risks" have declined, with consensus estimates for economic growth increasing throughout the year.

Deutsche Bank chief global strategist Binky Chadha recently told Yahoo Finance that more economic growth than expected could help the S&P 500 reach 6,000 by the end of the year. But for his current target of 5,500, a large part of the case is built around earnings growth that is "accelerating, and continues to accelerate." 

"We see the earnings cycle having plenty of legs," Chadha wrote in a research note boosting his year-end S&P 500 target to 5,550 from 5,100 on May 17. "While all the growth may not materialize this year, we see market confidence in a continued recovery rising by year-end, supporting equity multiples."

Chadha, like other strategists, had been looking for a rotation in earnings growth to begin in the first quarter, with Big Tech's growth starting to slow and other areas catching up. That didn't quite happen. A basket of stocks Chadha tracks labeled "Mega-Cap Growth and Tech" grew about 39% compared to the year prior, roughly flat from the 40% year-over-year growth seen in the previous quarter. 

This isn't an issue in itself, per Chadha. He believes the robust earnings growth seen in this group, which includes the "Magnificent Seven" tech stocks, among a few other big names like Netflix (NFLX), Visa (V), and Adobe (ADBE), is "extremely likely to slow at some point." And that will come as positive developments have been brewing under the surface in other pockets of the market. 

Earnings for cyclicals and defensives grew at a 7.5% clip in the first quarter, which Chadha noted is "healthy." Other strategists believe a similar catch-up scenario is set to take place in earnings growth throughout the rest of this year.

Bank of America US and Canada equity strategist Ohsung Kwon highlighted in a recent research note that Nvidia drove 37% of the S&P 500's earnings growth over the past 12 months. In the next 12 months, it's expected to represent just 9%.

"We don't think it's just about Nvidia anymore," Kwon told Yahoo Finance. "Things are broadening out ... To power, commodities, utilities, things like that."

Strategists like Kwon say the most notable blip in the fundamental story for stocks has been cost-cutting driving earnings growth, not increased demand and booming revenues. Kwon and Bank of America remain steadfast in their belief this will change later this year as companies in the industrial sector have signaled they believe they've hit the trough of declining demand in their cycle. 

"In the second half of the year, we're gonna start seeing that demand recover," Kwon said. "And with that, we're gonna see operating leverage and better margins."

Charles Schwab senior investment strategist Kevin Gordon noted that this will be a key trend for investors throughout the year. In the first quarter, companies that beat estimates for revenue outperformed those that just beat estimates on earnings.

To Gordon, this was the market singling out companies that were just increasing earnings through cost-cutting. 

"The market tends to sniff [cost-cutting] out and say at some point, OK, now we have to actually see real demand come back online," Gordon told Yahoo Finance. 

NEW YORK, NEW YORK - JANUARY 29: Traders work on the floor of the New York Stock Exchange (NYSE) on January 29, 2024 in New York City. Wall Street observers are watching to see if an upcoming Fed announcement on rate policy and the most recent violence in the Middle East will have any effect on the markets. (Photo by Spencer Platt/Getty Images)
Traders work on the floor of the New York Stock Exchange (NYSE) on Jan. 29, 2024, in New York City. (Spencer Platt/Getty Images)
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


26.

1 Technology ETF to Buy Hand Over Fist and 1 to Avoid

2024-05-27 11:30:00 by Justin Pope, The Motley Fool from Motley Fool

Investing in technology stocks can be confusing, complex, or both. That's where exchange-traded funds (ETFs) can be helpful. Instead of sifting through hard-to-understand technology companies, a technology-focused ETF can make life easier by offering investors instant portfolio diversification.

But not all ETFs are created equal. Some have performed better than others over the years. Here is one blue-chip technology ETF investors should consider buying and holding and another that's seemingly lost its touch after bursting into the spotlight during the pandemic.

Buy this ETF: Invesco QQQ ETF

The Invesco QQQ ETF (NASDAQ: QQQ) is built with 100 of the largest companies in the Nasdaq Composite. The "Magnificent Seven" stocks, big technology companies at the forefront of today's artificial intelligence (AI) boom, are prevalent throughout the fund's top 10 holdings. About 59% of the ETF is built with technology stocks, followed by exposure to consumer discretionary stocks at 18% and further diversification from there.

Below, you can see the fund has handily outperformed the broader Nasdaq Composite over the past decade. Successful companies generally grow larger over time, ascending to the top of the Nasdaq, where they get put into the Invesco QQQ. In other words, the ETF is almost like a rolling bucket of the Nasdaq's most prominent and brightest star companies.

QQQ Total Return Level Chart
QQQ Total Return Level data by YCharts.

Nobody can guarantee that the Invesco QQQ will continue to perform this well -- and it certainly isn't risk-free. The underlying stocks could languish under overheated valuations, causing the entire ETF to underperform.

However, the blue-chip technology stocks in this ETF are often well-established (sometimes dominant) and flush with cash to invest in growth and return profits to shareholders. That sets investors up nicely for the long term and helps explain the Invesco QQQ ETF's excellent history.

Avoid this ETF: Ark Innovation ETF

The Ark Innovation ETF (NYSEMKT: ARKK) has taken an entirely different investing approach despite having a similarly heavy concentration in technology stocks. Founded and managed by Cathie Wood, the ETF is innovation-focused and bets on up-and-coming businesses in emerging industries. It became famous several years ago after a successful large bet on Tesla. Some of its top holdings expose the company to other growth industries, including fintech, digital ads, and AI.

Investors must know that this doesn't necessarily mean the fund targets large or established technology stocks. The willingness to take riskier swings has made the fund far more volatile. The fund outperformed the broader Nasdaq Composite by a tremendous margin in a low-interest-rate environment that favored growth stocks but has underperformed since interest rates rose a few years ago.

^NACTR Chart
^NACTR data by YCharts.

So, why avoid the Ark Innovation ETF today? There are a couple of problems. First, inflation hasn't come down as much as officials have hoped. Wall Street entered the year believing that several rate cuts could be possible, but rates have remained the same thus far in 2024. That could continue pressuring the types of stocks the ETF holds.

Secondly, the fund is actively managed, which leaves room for bad decisions that could negatively impact returns while charging a higher expense fee of 0.75% (versus 0.2% for the Invesco QQQ).

Wrapping things up

Investors are looking at two different styles of ETFs. The passively managed Invesco QQQ tracks an index, while the Ark Innovation ETF actively shuffles its holdings.

The Invesco QQQ might not have as explosive an upside potential as the Ark Innovation ETF, but performing companies grow and float to the top of the ETF. Meanwhile, the Ark Innovation ETF is more volatile and has dramatically underperformed in this economic climate. Since it's actively managed, the fund managers must pick the right stocks and buy and sell them at the right time.

Ultimately, the Invesco QQQ Trust ETF is more straightforward and has created sustained investment returns, making it the better buy.

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.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,342!*

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 quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of May 13, 2024

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.


27.

Want to Retire Comfortably With at Least $1.5 Million? Here's How Much You Should Invest Today.

2024-05-27 11:01:00 by David Jagielski, The Motley Fool from Motley Fool

If you want to retire comfortably, the amount you'll want to aim for is $1.5 million, according to a recent study from insurance company Northwestern Mutual. Given rising inflation in recent years, Americans need to budget much more for retirement than just $1 million (what was seen as the "magic number" back in 2021).

It's a high target, but depending on how much you have saved up, and the number of investing years you have left, it may not be impossible. Here's how much you would need to invest today to be on track to retire with that much in your portfolio.

Determining your strategy and expected annual return is the first step

There are two important variables to consider when trying to determine how much you may need to invest today: investing years and expected returns. Investing years will depend on how much longer you'll be in the workforce. Your expected returns, however, may vary depending on your investing strategy.

If you simply want to mirror the market, you might expect to earn about 10% per year, which is the long-term S&P 500 average. If you want to be more conservative and invest in safer stocks, your returns may be much lower than that. But if you're willing to take on some risk and invest in growth stocks, you have the potential to generate better-than-average returns. While growth equities can leave you exposed to some risk, as long as you have 10-plus investing years left, that may be the ideal option for the long run.

Take the Invesco QQQ Trust (NASDAQ: QQQ). It holds the top 100 non-financial stocks on the Nasdaq. The exchange-traded fund (ETF) makes for a great way to invest in top growth stocks. And with broad exposure, no stock accounts for even 10% of the ETF's overall portfolio. At 8.6%, tech giant Microsoft is the fund's largest holding, followed by Apple at just under 8.1%.

The Invesco QQQ Trust has generated a return of 415% over the past 10 years, and that grows to 456% when including dividend payments. That averages out to a compound annual growth rate of 18.7%. Even the fund's annualized return of 9.7% since its inception in 1999 would beat the S&P 500's average gain around 5.7% over that same period.

How much should you invest today if your goal is to get to $1.5 million by retirement?

Here's how much you would want to plan to invest today to end up with $1.5 million in retirement, based on different time frames and growth rates.

    Initial investment at different growth rates
Years to Retirement 15% 10% 5%
40 $5,600 $33,142 $213,069
35 $11,263 $53,376 $271,935
30 $22,655 $85,963 $347,066
25 $45,566 $138,444 $442,954
20 $91,650 $222,965 $565,334
15 $184,342 $359,088 $721,526

Calculations by author.

Investing early has significant advantages, as does targeting a high growth rate. But even though some of these figures may look daunting, it's important to remember this also assumes you just make a single lump-sum investment and don't invest anything else; you can always add to your investments over time. And by having more money invested, through compounding, you can benefit from greater gains down the road.

Simplifying your strategy can make it easier to stay on track

These numbers can help serve as a guide, but generally it's a good idea to invest as much as you can. And putting that money into a growth-focused fund like the Invesco QQQ can be a way to help set you up for the best returns in the long run. Whether it's investing every week, month, quarter, or year, making the process as easy and straightforward as possible can increase the likelihood that you stay on track in meeting your investment goals. If you don't want to track individual stocks, investing in a diversified fund like the Invesco QQQ is a good option for the long haul.

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.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,342!*

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 quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of May 13, 2024

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends 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.


28.

Wall Street is getting even more bullish on stocks

2024-05-27 10:03:09 by Josh Schafer from Yahoo Finance

Nearly five months through 2024, the major stock indexes are near record highs

Wall Street doesn't think this rally is over, either, as the outlooks for earnings and economic growth have steadily risen throughout the year.

In the past two weeks, three equity strategists tracked by Yahoo Finance have boosted their year-end targets for the S&P 500. The median target on Wall Street for the benchmark index now sits at 5,250, up from the median target of 4,850 on Dec. 30, per Bloomberg data. The Street-high target has moved up to 5,600 from 5,200 to start the year too.

"The current environment is basically what the bulls were hoping for, and they are getting it," Bank of America US and Canada equity strategist Ohsung Kwon told Yahoo Finance. "It's basically a soft landing."

Kwon explained that while inflation data has come in hotter than expected to start the year, it still hasn't indicated that price increases are reaccelerating. Meanwhile, other data has signaled a slowing but strong economy, easing fears that red-hot growth could spark another inflation spike. In essence, this has fueled the soft landing narrative Wall Street bulls hoped for entering the year, per Kwon.

BMO Capital Markets chief investment strategist Brian Belski noted that markets have made an important shift as this data has come in. Markets are now pricing in about two rate cuts this year, down from a peak of nearly seven to start the year, per Bloomberg data. This aligns with the Fed's most recent projections, in which officials favored two or three rate cuts this year. 

"It has become clear to us that we underestimated the strength of the market momentum, particularly considering that investor expectations and Fed policy guidance have become essentially aligned vs. the significant disconnect that existed at the beginning of the year," Belski wrote in a research note on May 15. 

MAY 15th 2024: Record high closings for all three major market indexes on Wall Street as the Dow Jones Industrial Average, the S&P 500 stock market index and the NASDAQ Composite each closed at new all-time record highs. The Dow closed at 39,908, the S&P closed at 5308 and the NASDAQ closed at 16,742. - File Photo by: zz/STRF/STAR MAX/IPx 2020 6/14/20 Atmosphere in and around Wall Street and The New York Stock Exchange in the Financial District of Lower Manhattan, New York City on June 14, 2020 during the coronavirus pandemic amid the aftermath of protests, demonstrations, riots, vandalism and destruction of property in response to the death of George Floyd who died while being arrested by police officers in Minneapolis, Minnesota on May 25th. (NYC)
Atmosphere in and around Wall Street and The New York Stock Exchange in the Financial District of Lower Manhattan, New York City on June 14, 2020. (zz/STRF/STAR MAX/IPx)
zz/STRF/STAR MAX/IPx

In that note, Belski boosted his year-end target from 5,100 to 5,600 — a new high on Wall Street. He noted that with the level of strength seen in stocks to start the year, history says further gains are likely ahead. In years where the S&P 500 rallies more than 8% in the first five months of the year, as it just did, the index gains more than 7% to finish the year 70% of the time, per Belski's analysis of historical data.

Belski and other strategists who boosted their outlook for stocks this year did warn, however, that stocks' move upward likely won't come without more pullbacks. Belski noted that April's 5% retreat was meager in comparison to the usual more than 9% seen in the second year of bull markets.

But given the rally in stocks to start the year, "should a more severe pullback happen, it will likely occur at higher index levels than we previously anticipated," Belski stated, providing a higher landing spot for the S&P 500 after a rebound. 

Entering the year, bullish strategists on Wall Street were adamant that a key to the market rally this year would be a continued rebound in corporate earnings. And thus far, that has played out. Earnings grew 6% in the first quarter of 2024, the highest rate of growth seen in nearly two years. 

Thus far, what's driving earnings hasn't changed significantly. Tech earnings, like Nvidia's blowout quarter from last Wednesday, are driving the lion's share of earnings growth in the S&P 500. But strategists think the seeds are still in place for a broadening to end 2024. 

Kwon noted that the first stage of the AI cycle has already been happening with earnings growing at companies like Nvidia (NVDA) as tech giants like Alphabet (GOOG, GOOGL), Amazon (AMZN), and Microsoft (MSFT) invest in the growing technology. But the rewards are starting to expand with recent rallies in sectors like Utilities and Energy. 

"We don't think it's just about Nvidia anymore," Kwon said. "Things are broadening out. ... To power, commodities, utilities, things like that."

Kwon noted in a recent research note that Nvidia drove 37% of the S&P 500's earnings growth over the past year. In the next 12 months, it's expected to represent just 9%.

Deutsche Bank's chief equity strategist Binky Chadha also believes other areas of the S&P 500 are set to contribute to robust earnings growth through the end of the year. He recently boosted his S&P 500 target to 5,500 from a prior target of 5,100 but told Yahoo Finance that target has clear "risks to the upside."

For one, Chadha notes that while people are "talking bullish," equity positioning hasn't shifted much in the past three months. Deutsche Bank's measure of positioning shows investors are "overweight" equities but not to the "extreme" levels seen in 2021 and 2018. 

To Chadha, this shows there could be more room to run for stocks, particularly given that he feels consensus isn't currently pricing in outperformance for the US economy.

Chadha highlights that expectations for the US economy have really just shifted from an incoming recession to at or below normal trend growth. If that consensus continues to move higher, and the US economy once again grows more than expected this year amid what some believe could be a productivity boom for the US labor force, it's not hard to see the S&P 500 hitting 6,000, per Chadha. 

"We've come a long way, but we don't seem to have gone all the way," Chadha said.

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


29.

Forget the Nasdaq 100, Buy This ETF Instead

2024-05-26 10:10:00 by Will Healy, The Motley Fool from Motley Fool

At first glance, it may seem unwise to speak negatively of the Nasdaq 100 and its corresponding exchange-traded fund (ETF), the Invesco QQQ Trust (NASDAQ: QQQ). Considering that $100,000 invested 20 years ago is now worth about $1.3 million, it has obviously served as an excellent investment vehicle.

However, one segment of tech has stood out for its performance: semiconductors. Despite a relatively high level of volatility, chips have powered the tech industry, taking tech returns considerably higher. Thus, instead of investing in the Nasdaq 100 through the Invesco QQQ Trust, one might want to consider a certain semiconductor ETF that may bring higher returns.

The semiconductor ETF

This fast-growing investment is the VanEck Semiconductor ETF (NASDAQ: SMH).

Admittedly, the VanEck ETF comes with a higher level of risk. With that fund, investors are all-in, not only on technology, but also on a specific part of the tech industry. Also, instead of 100 stocks, the VanEck fund holds only 26 stocks.

In comparison, the Nasdaq 100 has a 59% allocation to technology as of the end of the first quarter of 2024. Still, that index holds stakes in 10 industry sectors, a factor that brings some diversification.

Also, VanEck ETF shareholders pay an expense ratio of 0.35%, higher than that of Invesco QQQ at 0.20%.

However, its managers seem to earn the higher fees. Over the last year, the fund has risen 72%. Also, extending the timeline out over 10 years, which includes downtimes for the industry and the overall market, investors have earned an average return of almost 27% annually. This exceeds the average return on the Invesco QQQ over the last 10 years of 19% per year.

VanEck Semiconductor ETF vs. Invesco QQQ (Annual % Return as of 3/31/2024)
  One Year Three Years Five Years 10 Years
VanEck ETF 72% 24% 35% 27%
Invesco QQQ 39% 12% 21% 19%

Data sources: VanEck, Invesco.

Moreover, a part of the higher returns may ironically be the cyclicality within the semiconductor industry. As much as investors benefit from significant upside in the chip industry, it is also known for considerable sell-offs during downtimes. So severe are the sell-offs that occasionally, the Nasdaq 100 will outperform the VanEck fund.

Nonetheless, investors should remember that the chip industry has recovered from every past downturn. Thus, if one sees a time when the Nasdaq 100 outperforms the ETF over a one-year or three-year period, it is likely one of the best times to add shares of the VanEck fund.

SMH Total Return Level Chart
SMH Total Return Level data by YCharts

The VanEck ETF's stock investments

The VanEck Semiconductor ETF has also earned its returns by making significant but calculated bets on specific semiconductor stocks.

Not surprisingly, its largest position is Nvidia, making up nearly 21% of the fund's holdings. Nvidia currently dominates the market for artificial intelligence (AI) chips, allowing it to post triple-digit revenue growth in recent quarters. That has likely driven a significant amount of its returns this year.

Furthermore, it takes on a different type of risk with its 13% stake in Taiwan Semiconductor. As the dominant manufacturer of high-end chips, it has not experienced the volatility of Nvidia. Also, since it is the most advanced chip manufacturer, it is well-positioned to prosper from AI.

The only other stock with a stake significantly higher than 5% is Broadcom, which makes up just under 8% of the fund. The specialty business-to-business chip designer has benefited from strong demand for AI accelerators and networking products in AI data centers, leading to the stock more than doubling over the last year.

The remaining 23 stocks are positions of 5% or less in varying parts of the chip industry. This can range from chip design companies like Qualcomm to analog chip companies like Texas Instruments to ASML, a leader in equipment manufacturing. These encompass all major subsegments within the semiconductor industry. Since the industry serves a wide range of needs and customers, it gives the fund more balance than one might assume.

Also, thanks to the industry's strong performance over the years, such stocks have collectively made significant contributions to the fund's returns. With AI again stoking demand for semiconductors, these dynamics are unlikely to change anytime soon.

Investing in the VanEck Semiconductor ETF

The VanEck Semiconductor ETF has outperformed index stocks like the Invesco QQQ due to calculated bets and secular growth across the chip industry.

Admittedly, a fund with 26 stocks is riskier than one with 100, and betting on one sector exclusively could hurt investors long-term.

Nonetheless, the tech industry depends heavily on semiconductors, a factor that has led to outsized returns over long periods. While no investor should go all-in on semiconductors, the sector is too crucial not to have a stake. Ultimately, the VanEck Semiconductor ETF allows investors to benefit from this industry while mitigating its risks.

Should you invest $1,000 in VanEck ETF Trust - VanEck Semiconductor ETF right now?

Before you buy stock in VanEck ETF Trust - VanEck Semiconductor ETF, 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 VanEck ETF Trust - VanEck Semiconductor ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,342!*

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Will Healy has positions in Qualcomm. The Motley Fool has positions in and recommends ASML, Nvidia, Qualcomm, Taiwan Semiconductor Manufacturing, and Texas Instruments. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.


30.

Nvidia ETFs Soar Following Strong Q1 Results

2024-05-23 23:01:35 by Sumit Roy from etf.com

Nvidia and Tech ETFs

AI chipmaker Nvidia jumped over 10% on Thursday, adding over $200 billion in market value and lifting many tech, AI, and semiconductor-focused exchange-traded funds after it reported stellar earnings for the first quarter. 

Nvidia reported top and bottom-line results that handily beat analyst estimates, while issuing guidance for the second quarter that was also better-than-expected.  

A full 504 U.S.-listed ETFs own Nvidia, according to etf.com’s stock holdings tool.  

That includes the AXS Esoterica NextG Economy ETF (WUGI) and the VanEck Semiconductor ETF (SMH), which allocate 27% and 21% of their portfolios, respectively, to the stock.  

The ETFs were trading up 2% to 3% midday, a strong showing on a day in which the SPDR S&P 500 ETF Trust (SPY) was close to unchanged. 

Better still was the whopping 21% gain for the GraniteShares 2x Long NVDA Daily ETF (NVDL), a volatile single-stock ETF tied to Nvidia stock.  

Since the start of the year, Nvidia is up 111%, while NVDL is higher by 248%. 

Strong Results  

Nvidia reported earnings per share of $6.12 on revenues of $26 billion for the first quarter. That compares to the $5.65 and $24.7 billion that analysts were expecting. 

Revenue guidance for Q2 was $28 billion, ahead of the $26.8 billion that analysts had penciled in before the report. 

The company also announced that it would split its stock 10-for-1 and that it would increase its quarterly dividend by $0.04 per share to $0.10. 

Investors were relieved that Nvidia’s growth remained strong ahead of the launch of its next generation of AI chips. 

There was some worry that the transition period could result in a deceleration in the company’s growth as Nvidia’s customers geared up to purchase the new Blackwell chips later this year.  

Instead, demand for Nvidia’s current line-up of Hopper chips remained extremely robust. 




31.

Prediction: 1 Phenomenal ETF That Is Almost Bound to Beat the S&P 500

2024-05-22 13:00:00 by Neil Patel, The Motley Fool from Motley Fool

In the past 10 years, the S&P 500 index has generated a total return of 240%. This means a $10,000 investment in May 2014 would be worth $34,000 today. That's certainly a respectable gain that should please any investor. This broad index of the largest and most profitable U.S.-based companies gets a lot of the attention as it's the most widely followed barometer to assess how the stock market is performing.

However, there's one booming exchange-traded fund (ETF) that beat the S&P 500 in the past and is almost bound to keep doing so over the long term.

A history of outperformance

The Invesco QQQ Trust (NASDAQ: QQQ) has produced a total return of 460% in the past 10 years, easily crushing the S&P 500's gain. That same $10,000 would leave you with a balance of $56,000 right now. This is a huge gap that we can't ignore. In fact, this outperformance holds true even if we look back over the past three- and five-year periods.

So, you might be wondering just what exactly the QQQ is. It's an ETF that contains the 100 largest non-financial companies that trade on the Nasdaq exchange. Of the stocks in the QQQ, 59% belong in the technology sector, while 18% are from the consumer discretionary sector. It really is an investment vehicle that gives its owners exposure to innovative and disruptive businesses.

It's worth mentioning that the "Magnificent Seven" components hold a huge weight in the QQQ, 43% of the entire ETF's assets to be exact. These industry-leading enterprises benefit from some powerful tailwinds, like cloud computing, digital payments, artificial intelligence, digital advertising, and streaming entertainment.

The composition helps explain why the average business in the QQQ has likely posted annualized revenue growth in the past five or 10 years that's a much faster pace than the typical company in the S&P 500. Higher sales can lead to higher earnings, which can result in rising share prices.

Other factors to consider

It's very easy for investors to believe that past performance will repeat itself. But this isn't always the case. While the QQQ definitely possesses qualities that foreshadow ongoing outperformance, like its tech-heavy focus and higher growth potential, there are other factors that must be considered.

The stocks are more expensive than the average, as shown by the average holding's price-to-earnings ratio of 35. Some less optimistic investors might believe that many of the highly weighted stocks in the QQQ are expensive and that their valuations will come down soon. While that may be the case, I think over very long periods of time, it has proven to be a lucrative bet to focus on some of the most innovative and forward-thinking enterprises.

Plus, with the QQQ, it's not necessary to pick a single winner within a specific technological trend. Owning 100 different stocks provides a broad level of exposure that ensures you can capture the winners.

I also believe macroeconomic factors could play a role. Tech and consumer discretionary stocks typically do well in robust economic environments. With high interest rates and ongoing inflationary pressures, one could argue we are far from this type of favorable setting. Perhaps this means the QQQ's returns in the foreseeable future will disappoint investors.

I'll counter that by saying that the QQQ has actually outperformed the S&P 500 and the Nasdaq Composite since the start of 2023. So, its monster gain has occurred in the face of uncertain macro conditions.

I don't see any compelling reason to believe that the QQQ won't continue beating its more popular benchmark over the next five to 10 years.

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.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $580,722!*

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 quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of May 13, 2024

Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.


32.

Crypto just became a political football, and ether is the early winner

2024-05-22 10:00:31 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

Crypto is quickly becoming an election issue, and ethereum is the biggest winner so far. 

From Monday to Tuesday, ether (ETH-USD) jumped 21% — its best two-day run since January 2021.

But just before the giant surge, the prospects for the next big crypto rally had become shaky.

The government had cooled on approving a suite of spot ether ETFs. Excitement over a similar array of bitcoin ETFs arguably reignited the entire crypto space late last year and provided a continued boost into this year. 

The thinking was that widely available crypto ETFs would facilitate crypto adoption by latecomers. Less-crypto-savvy investors could then allocate a "responsible" portion of their 401ks to the new ETFs. 

Jim Bianco of Bianco Research just poured cold water on that theory, but it seemed that spot ether ETFs wouldn't even get their chance at testing the theory. The Securities and Exchange Commission — responsible for overseeing the registration process — had gone silent with the ETF sponsors as a key deadline approached.

Then, "the game changed," wrote Anthony Pompliano in the Pomp Letter. 

On Monday, Bloomberg's Eric Balchunas and James Seyffart abruptly bumped up their odds of spot ether ETF approval to 75% from 25% after "hearing chatter that the SEC could be doing a 180 on this (increasingly political issue)."

Suddenly, the cogs of bureaucracy improbably began churning again, and the surge in ether prices was underway.

Bitwise Asset Management chief investment officer Matt Hogan joined Yahoo Finance's Market Domination Wednesday to discuss the developments.

"There has been a real sea change in Washington around crypto," he said, highlighting recent bipartisan crypto legislation and a newly emerging coalition around stablecoins

"It looks like Washington has gotten the message that crypto is good for America and that it's popular with American voters," he said.

Pomp pointed out that only a week prior, Trump came out as a pro-crypto candidate. 

Whether or not the SEC's flip-flop is related, crypto bulls have been reenergized with the prospect of crypto voters being courted across both sides of the aisle.

"A bunch of people on the internet created a $2.6 trillion industry in the face of government pressure. Imagine what happens when the government is now actively courting these individuals and companies, along with embracing the technology. The headwind becomes a tailwind quickly," wrote Pomp.

Spoken like a true bull.

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33.

What Nvidia says about AI chip demand could matter for more than just the tech trade

2024-05-22 08:44:11 by Josh Schafer from Yahoo Finance

Artificial intelligence enthusiasm has been spreading across the stock market. 

Wednesday night's Nvidia (NVDA) earnings call will mark a year since the chipmaker first shocked Wall Street with its demand for AI chips. Since then, mentions of AI have skyrocketed on earnings calls, growing 186% since the first quarter of 2023, per Bank of America Research. 

This comes as the conversation around AI has quickly moved from AI chipmakers like Nvidia (NVDA) and AMD (AMD) to AI power users like Alphabet (GOOG, GOOGL), Meta (META), Amazon (AMZN), and Microsoft (MSFT). More recently, strategists have highlighted a broadening out to other sectors that could benefit from the increased power usage, like Energy (XLE), Utilities (XLU), and Commodities.   

"It's not just about NVDA anymore," Bank of America US and Canada equity strategist Ohsung Kwon wrote in a note to clients on Monday.

This shift has already been underway in the market. Several precious metals, including copper (HG=F), which strategists have said will benefit from AI spend, have hit recent highs. The Utilities and Energy sectors are two of the top-performing sectors in the S&P 500 (^GSPC) this year, up about 15% and 13%, respectively.

This has trickled down to individual names that are now rivaling the meteoric stock rise of Nvidia since the start of 2024. Texas-based Vistra Corp (VST) is up roughly 140% this year, while Constellation Energy (CEG) shares have risen nearly 90%, which is about in line with Nvidia's rise this year.

In a note on Sunday, Morgan Stanley chief investment officer Mike Wilson listed Utilities as an Overweight sector, noting it offers "upside to the AI power theme." Wilson highlighted that the Power and Utilities team at Morgan Stanley believes electricity could rise from 3% of total US consumption in 2023 to about 10% by 2030, driven by new AI data centers that are 50 times the size of previous ones. 

"Both traditional and alternative energy providers have upside revisions potential amid the increasing need for AI data center power and more favorable data center power deals," Wilson wrote. 

And companies have been playing up their role in the AI buildout too.

Research from Goldman Sachs' equity strategy team led by David Kostin shows mentions of AI soared in the first quarter. More than 66% of companies in the Energy sector mentioned AI during their earnings calls this quarter, up from 19.1% last quarter.

Given the big-picture implications, investors will be closely watching Nvidia's report for color on AI chip demand. 

Thus far, Nvidia has repeatedly surprised investors on this front, continuously topping analyst expectations for quarterly results and boosting its outlook for the coming quarter amid robust demand for its AI servers.

Whether this trend holds or breaks could now have repercussions for a variety of sectors. 

"If markets wake up to say, 'Hey, maybe we got a little bit too excited about this and maybe we pulled forward some of these earnings just a little bit,' and that's reflected in those valuations,"' JPMorgan Asset Management global market strategist Jack Manley told Yahoo Finance, "that's where I think you have the potential for a bit of a shaky road."

BRAZIL - 2024/03/22: In this photo illustration, the Nvidia Corporation logo is displayed on a smartphone screen, with a graphic representation of the stock market in the background. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)
Nvidia Corporation logo is displayed on a smartphone screen, with a graphic representation of the stock market in the background. (Rafael Henrique/SOPA Images/LightRocket via Getty Images)
SOPA Images 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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34.

Actively Managed and Outcome-Based ETFs Take Center Stage in 2024

2024-05-21 12:00:00 by etf.com

Giang Bu Nasdaq Interview


 

In an interview with etf.com, Giang Bui, Head of U.S. Equities & ETPs at Nasdaq and member of the etf.com editorial advisory board, discussed key trends shaping the ETF landscape in 2024. Bui highlighted the continued dominance of actively managed ETFs, which comprised two-thirds of new launches year-to-date, exceeding even 2023's record pace. 

"Active equity makes up about half of new launches," Bui noted, reflecting investor appetite for professional stock selection in the current market environment. Outcome-based strategies, designed to achieve specific goals like risk management or income generation, remain a significant driver of innovation. 

However, the hottest topic in ETFs this year undoubtedly revolves around Bitcoin. "It's been really exciting to see all the adoption and how well [the bitcoin ETFs] are trading," Bui remarked, emphasizing their operational efficiency and asset accumulation. 

Exchanges Facilitate Investor Access 

Bui also addressed the crucial role exchanges play in ensuring investor access to ETFs. Nasdaq, boasting over 600 listed ETFs with a combined value of $1 trillion, takes pride in supporting issuers throughout the entire product lifecycle. 

"We partner with issuers on ETF education and provide robust liquidity support," Bui explained. This commitment translates to a smooth and efficient experience for investors and financial advisors seeking to incorporate ETFs into their portfolios. 

Nasdaq Selected as Winner for Index Provider of the Year

On a separate note, Bui expressed enthusiasm about Nasdaq's nomination for etf.com's Index Provider of the Year award. "We've been in the index space for over 50 years," Bui said, acknowledging the recognition from a respected industry publication. 

More importantly, Bui emphasized Nasdaq's dedication to supporting issuers who leverage their indexes. "We're excited to be partnering with them to provide access to strategies about emerging themes and cater to investor demand," Bui concluded. 

This conversation underscores the dynamism of the ETF industry in 2024. Actively managed and outcome-based options continue to gain traction, while innovative products like bitcoin ETFs capture investor imagination. With continued exchange support, investors can expect an even more robust and accessible ETF landscape in the years to come. 




35.

Wall Street's biggest bear flips, raises S&P 500 price target by 20%

2024-05-20 14:22:28 by Josh Schafer from Yahoo Finance

Morgan Stanley's Mike Wilson is done calling for US stocks to fall off a cliff. 

After having one of the lowest S&P 500 (^GSPC) year-end targets for the past year, Morgan Stanley's chief investment officer changed his tune in a note to clients on Sunday. 

Wilson now sees the S&P 500 hitting 5,400 in the next 12 months, up from his prior call that the index would fall to 4,500. Wilson's new target reflects about 2% upside in the index over the next 12 months, with valuations falling and earnings continuing to rise. 

"Our 2024 and 2025 earnings growth forecasts (8% and 13%, respectively) assume healthy, mid-single-digit top-line growth in addition to margin expansion in both years as positive operating leverage resumes (particularly in 2025)," Wilson wrote in the note. 

"Modest valuation compression (from ~20x to ~19x in the base case) as earnings adjust higher is typical in a mid-to-late-cycle backdrop (occurred in the mid-1990s, mid-2000s, and 2018 most recently)."

Wilson is the third macro strategist tracked by Yahoo Finance to boost their S&P 500 target in the last week. 

BMO's chief investment strategist Brian Belski boosted his year-end target to a street-high 5,600 on May 15, arguing that momentum in the recent rally will continue throughout the rest of the year. 

At Deutsche Bank, chief equity strategist Binky Chadha boosted his year-end target for the benchmark to 5,500 from 5,100 on May 17. Chadha cited robust earnings growth and an improving macroeconomic outlook as reasons stocks could keep moving higher.

Wilson agrees with his peers that the growth outlook has improved, but is more measured on what that could mean for stocks moving forward. 

Wilson wrote Monday that macro outcomes have become "increasingly hard to predict" in the current environment, referring to how the market has shifted back and forth between a "soft landing" and "no landing" base case.

This prompted Wilson to initiate a "wider-than-normal" bull and bear case scenario in addition to his base case. Wilson sees a bull case sending the S&P 500 to 6,350, driven by stronger-than-anticipated earnings growth, among other drivers. In his bear case of 4,200, the US economy would slip into recession. 

Wilson also warned investors should be "ready for more rotations."

Given the likelihood of a continuously shifting macro consensus, he's recommending a barbell approach — quality growth and cyclical stocks that will outperform if economic data continues to surprise the upside, with defensive stocks mixed in as a hedge.

Wilson upgraded the Industrials (XLI) sector to Overweight due to an improving earnings outlook and an attractive entry point after underperformance over the past year. He also likes Utilities (XLU), citing its typical role as a defensive sector, as well as the sector's potential to benefit from the AI boom and a potential interest rate-cutting cycle.

"Markets appear to have moved from a 'soft landing' outcome in January to a 'no landing' in March and now back towards a 'softer landing,'" Wilson wrote. 

"Markets even wrestled briefly with a slower growth/higher inflation outcome in April ... Bottom line, markets are fickle and will trade the data as it's released, particularly when the outcomes are so uncertain."

(Getty Images)
lvcandy 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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36.

Markets brace for Nvidia earnings: What to know this week

2024-05-20 09:18:03 by Josh Schafer from Yahoo Finance

Stocks have once again ended a trading week having hit new records.

Signs of an inflation cooldown prompted markets to grow more optimistic about the prospect of Federal Reserve interest rate cuts and stocks rallied as a result, with all three major averages hitting record highs on Wednesday.

For the week, the Nasdaq Composite (^IXIC) rose more than 2% while the S&P 500 (^GSPC) popped more than 1.5%. The Dow Jones Industrial Average (^DJI) gained more than 1%, closing above 40,000 for the first time ever on Friday.

In the week ahead, highly anticipated earnings results from Nvidia (NVDA) are expected to be the key catalyst for markets. Results from Target (TGT), Palo Alto Networks (PANW), and Lowe's (LOW) will also be closely tracked by investors.

The week is expected to be quieter on the economic front, with updates on activity in the manufacturing and services sectors as well as the final reading of consumer sentiment for May on tap. Minutes from the Fed's May meeting are also expected on Wednesday afternoon.

April's reading of the Consumer Price Index showed core prices, which strip out the more volatile costs of food and gas, rose 3.6% over last year — the lowest annual rise in three years. This prompted investors to price in two full interest rate cuts this year for the first time since early April. 

The move brings the market closer in line with the Fed's projections of two or three interest rate cuts at some point this year. BMO Capital Markets chief investment strategist Brian Belski listed investors' alignment with the Fed on interest rate cuts as a reason supporting his call for the S&P 500 to end 2024 at 5,600, an increase of less than 7% from Friday's close. 

For investors, the key question will be whether this bullish narrative is sustainable or if the market will once again jump ahead of the Fed as it did in early 2024 when investors priced in nearly seven interest rate cuts on the back of positive economic data. The first test will come on Wednesday with the release of minutes from the Federal Open Market Committee's May meeting, which will provide a deeper look at the discussion among officials.

"The minutes from the May FOMC meeting should sound more hawkish on the margin than Chair Powell's press conference," Bank of America US economist Michael Gapen wrote in a note to clients. "Though Powell signaled the bar for hikes is high and that standing pat is the proper response to disinflation stalling out, others on the committee were more concerned about whether policy was doing enough."

US Federal Reserve Chair Chair Jerome Powell holds a press conference at the end of Federal Open Market Committee (FOMC) meeting in Washington, DC, on May 1, 2024. The Federal Reserve held interest rates steady for a sixth straight meeting on May 1, keeping the level at a 23-year high to fight stubborn price increases. At the end of a two-day meeting, the Fed kept the benchmark lending rate unchanged at 5.25-5.50 percent, citing a
Fed Chair Jerome Powell holds a press conference at the end of Federal Open Market Committee meeting in Washington, D.C., on May 1, 2024. (SAUL LOEB/AFP via Getty Images)
SAUL LOEB via Getty Images

Belski's year-end target bump was followed by another forecast raise on Friday. Deutsche Bank chief equity strategist Binky Chadha boosted his year-end target for the benchmark to 5,500 from 5,100. Chadha cited robust earnings growth and an improving macroeconomic outlook as reasons stocks could keep moving higher. 

"We see the earnings cycle having plenty of legs," Chadha said. "While all the growth may not materialize this year, we see market confidence in a continued recovery rising by year end, supporting equity multiples."

AI leader Nvidia is set to report earnings after the closing bell on Wednesday, capping off the reports from America's tech giants. Expectations are once again sky-high for the chipmaker. Analysts expect Nvidia grew earnings by more than 400% in the prior quarter while revenue increased 242%, per Bloomberg consensus data. 

For the second quarter, analysts project earnings growth of more than 120% and nearly 100% revenue growth.

"We see enough room for NVDA to post FQ1E (April) revenue potentially as high as $26B (data center ~$22-23B) and potentially guide to ~$27-28B in total revenue (data center ~$25-26B) — both good enough to keep the stock biased higher, in our view," UBS analyst Timothy Arcuri wrote in a note to clients previewing the earnings release. 

The logo of technology company Nvidia is seen at its headquarters in Santa Clara, California February 11, 2015. Nvidia Corp on Wednesday posted higher quarterly results that beat Wall Street expectations, sending its shares higher as the graphics chipmaker sought to sharpen its focus on high-end automobiles. Nvidia is trying to expand its graphics technology beyond the sluggish personal computer industry with its Tegra line of chips for mobile devices and increasingly for cars. REUTERS/Robert Galbraith  (UNITED STATES - Tags: SCIENCE TECHNOLOGY BUSINESS LOGO)
The logo of technology company Nvidia is seen at its headquarters in Santa Clara, Calif., Feb. 11, 2015. (REUTERS/Robert Galbraith)
REUTERS / Reuters

The stock is up more than 86% in 2024 and more than 200% over the past year since Nvidia kicked off the AI hype train with its blowout earnings report in May 2023. Given how Nvidia's stock has impacted other potential AI plays, and the broader market as a whole, all eyes will be on whether the company can once again live up to the hype. 

"If [Nvidia] can continue their enviable, remarkable string of beating estimates, raising guidance, then beating the raised guidance next quarter, that means that the AI trade can and will proceed apace," Interactive Brokers chief strategist Steve Sosnick wrote in a research note on Thursday. "If there is even the slightest sign of weakness, however, much more than that stock alone will suffer."

Just this past week, Dell shares rose about 10% as analysts from Morgan Stanley and Evercore ISI revealed bullish research on the company's AI prospects. 

The AI trade has already been expanding beyond the popular names like Nvidia, Microsoft (MSFT), Alphabet (GOOGL, GOOG), and Meta (META). Energy and Utilities are two of the best performing sectors in the S&P 500 this year, both adding more than 13%. While strategists have pointed to a catch-up trade in Utilities (XLU), AI has also been a driver of enthusiasm. The same could be said for Energy (XLE).

Research from Goldman Sachs' equity strategy team led by David Kostin shows mentions of AI soared in the first quarter amid a "broadening of the AI trade." More than 66% of companies in the energy sector mentioned AI during their earnings calls this quarter, up from 19.1% last quarter. 

JPMorgan Asset Management global market strategist Jack Manley said whether the AI story has legs "might be one of the more important questions that we have to ask." 

"Is this AI stuff the real deal or is it a flash in the plan?" Manley told Yahoo Finance. "And I mean, frankly, the jury is still out on whether or not it will fundamentally transform the world."

He added, "If markets wake up to say 'Hey, maybe we got a little bit too excited about this and maybe we pulled forward some of these earnings just a little bit, and that's reflected in those valuations.' That's where I think you have the potential for a bit of a shaky road." 

 

Earnings: Palo Alto Networks (PANW), Trip.com (TRIP), Zoom (ZM)

Economic news: No notable economic news.

Tuesday

Earnings: AutoZone (AZO), Macy's (M), XPeng (XPEV), Toll Brothers (TOL), Urban Outfitters (URBN)

Economic news: Philadelphia Fed Non-Manufacturing Activity, May (-12.4 previously)

Wednesday

Earnings: Nvidia (NVDA), e.l.f. Beauty (ELF), Petco (WOOF), Snowflake (SNOW), Target (TGT), TJX (TJX), Williams-Sonoma (WSM),

Economic news: MBA mortgage applications, May 17 (+0.5% previously); Existing home sales month-over-month, April (0% expected, -4.3% previously); FOMC meeting minutes

Thursday

Earnings: BJ's (BJ), Deckers Brands (DECK), Intuit (INTU), Polestar (PSNY), Ralph Lauren (RL), Ross Stores (ROST), TD Bank (TD), Workday (WDAY)

Economic news: Chicago Fed Nat Activity Index, April (0.15 previously); Initial jobless claims, week ending May 18 (222,000 previously); S&P Global US manufacturing PMI, May preliminary (50 previously); S&P Global US services PMI, May preliminary (51.3 previously); S&P Global US composite PMI, May preliminary (51.3 previously); Existing home sales month-over-month, January (5.0% expected, -1% previously)

Earnings: No notable earnings.

Economic news: Durable goods orders, April preliminary (0% expected, 0.9% prior); University of Michigan Consumer Sentiment, May final (67.6 expected, 67.4 previously)

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


37.

Trading stocks all day and all night might be an 'inevitability' for investors

2024-05-20 09:13:36 by Josh Schafer from Yahoo Finance

The stock market's daily open and close may one day have little meaning if an idea gaining traction on Wall Street becomes widespread.

24X National Exchange, a trading platform backed by hedge fund founder Steve Cohen, is seeking SEC approval to operate an around-the-clock exchange. There's interest in the idea from bigger players too: The New York Stock Exchange has reportedly polled market participants about interest in 24-hour access.

Several executives at companies that operate trading platforms told Yahoo Finance the shift from a traditional six-and-a-half-hour trading day to a never-ending one is becoming more likely — even if there are some concerns about volatility in late night sessions with low volume.

"It's a commercial inevitability," Interactive Brokers chief strategist Steve Sosnick told Yahoo Finance. "People all around the world are interested in the most active and highly tradable US instruments, and so it makes sense to offer them to a willing customer base."

Interactive Brokers is one of several firms that has already increased its offerings, with an overnight trading session that spans from 8 p.m. ET to 3:50 a.m. ET, five days a week. Popular retail brokerage Robinhood (HOOD) has too, offering 24-hour trading five days a week. The exchange has seen over $10 billion in volumes in its overnight transactions since launching its 24-hour market a year ago, the company said during its most recent earnings release. And on its busiest days, about 25% of the platform's trading volume has come in nontraditional market hours.

"In five years, I'm thoroughly convinced this will be the norm, and we'll look back and say, 'I can't believe we ever weren't able to trade around the clock,'" Robinhood chief brokerage officer Steve Quirk told Yahoo Finance. 

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 16, 2024.  REUTERS/Brendan McDermid
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 16, 2024. REUTERS/Brendan McDermid
REUTERS / Reuters

Like others in the industry who spoke to Yahoo Finance, Quirk noted that the new generation of investors, particularly those just coming into the market in their 20s, know few things that aren't accessible on their phone or laptop at all hours of the day. They don't expect trading to be any different. 

And given the adaptation of trading online in the past several decades, Quirk argues there's no reason not to meet that ask. Add in that many of the companies in the US now earn a significant amount of their money internationally — therefore drawing interest from foreign investors — and demand for 24-hour trading is clearly there. 

"At the moment, most of the exciting companies happen to be US listed," IG Group North America CEO JJ Kinahan told Yahoo Finance. "So people from around the world want to participate also; they may not want to put their full portfolio in the US, but they want to participate in what's going on in the US markets."

"And so I think as you start to see more brokerage firms expand around the world, you're going to see a demand coming from foreign countries that hasn't come in the past."

Kinahan did note that this could come with downside for investors, though, if liquidity isn't sufficient. Right now, there's a tight spread between the price investors ask to sell a stock at and where it's actually bought because volume is high. 

"There's an opportunity that those markets aren't always as tight and busy," Kinahan said.

Demand for trading stocks outside of normal US market hours has already been growing. 

CME Group — which offers global futures contracts tied to major indexes outside of normal market hours — has seen increased interest in nontraditional US hours trading. The average daily volume of trading on E-mini Nasdaq-100 futures in nontraditional US hours in 2024 is up about 24% from 2019, per CME Group's data.

CME Group's head of equities, Paul Woolman, reasons there's an educational aspect to the increased interest around trading outside of traditional hours as investors are realizing they don't need "to wait until the US opens to manage risk."

Woolman pointed out that many key market-moving events come outside of market hours. This includes, as always, corporate earnings releases but also economic data, which is closely watched amid the Federal Reserve's interest rate hiking cycle, and news from the Middle East since the start of the Russia-Ukraine war in 2022.

Just this past week, about one-third of the daily gains in the Nasdaq 100 (^NDX) came before the traditional market open as investors digested an 8:30 a.m. ET release of inflation data. 

"Clients want to be able to react to that news flow," Woolman said. "Historically, I think clients typically did try and hold on to their risk and would be waiting for six, eight, even 12 hours before they maybe traded again. I think clients learned they just can't afford to do that."

With signs of interest from investors, new players are trying to enter the 24-hour market space. 24X, the Cohen-backed trading platform, hopes to gain SEC approval for a 24-hour exchange this year. 

But Dmitri Galinov, CEO and founder of 24X, told Yahoo Finance that the full transition to a 24-hour market won't happen overnight, as large institutions will need time to train their staffs and adapt to a new culture. 

"I think it's going to take a little bit more time," Galinov said. "But what we see is that the overseas and retail [investors] and market makers will start driving the flow, and then I think over time naturally people will migrate to 24-hour trading with stocks the same way they do with currencies."

For US investors, the looming question remains how this could change the investing landscape. 

"It doesn't actually really impact the average US investor," Sosnick at Interactive Brokers said.

It appears that nothing will change as long as the demand is there to provide liquidity in the market, which already happens in after-hours trading. There would just be more opportunities to buy or sell. And as always, investors don't have to press either button. 

"Just because can someone can trade 24 hours a day does not imply that compels even the most active traders to be involved outside of US hours," Sosnick said. 

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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38.

Want to Invest in the "Magnificent Seven" Stocks? Buy This ETF Instead.

2024-05-19 07:08:00 by Geoffrey Seiler, The Motley Fool from Motley Fool

The "Magnificent Seven" stocks have been the darlings of Wall Street given their strong performances over the past couple of years. The group is made up of leading technology growth stocks that have helped power the market's bull run. The stocks in this exclusive club include chip giant Nvidia, iPhone maker Apple, search leader Alphabet, social media powerhouse Meta Platforms, electric vehicle maker Tesla, e-commerce juggernaut Amazon, and tech titan Microsoft.

Given their recent market leadership, investing in this group of stocks is tempting. However, before buying each of them individually, there is another alternative to consider: investing in the Invesco QQQ Trust ETF (NASDAQ: QQQ).

Why the Invesco QQQ ETF is a great alternative to the Magnificent Seven

The Invesco QQQ ETF is a passively managed exchange-traded fund (ETF) that tracks the performance of the Nasdaq-100 index. The index is weighted heavily toward tech stocks, with nearly 60% of its holdings in the sector. Another 18% of its holdings are in the consumer discretionary space, although many of these names are tech-oriented as well. For example, Amazon, Tesla, Netflix, and Booking Holdings are included in this segment.

The Magnificent Seven, meanwhile, are heavily represented in the ETF, with all seven stocks in its top 10 holdings. In fact, the group makes up 41% of the ETF's total portfolio. That right there gives investors a lot of exposure to this group of stocks.

However, the Invesco QQQ ETF adds a little extra diversity as well, which can be a good thing. The ETF is very much growth-oriented and gives investors exposure to companies leading the way in the areas of artificial intelligence (AI), cybersecurity, fintech, electric vehicles, and cloud computing.

The ETF also gives investors the opportunity to own the next big trending stocks as well. Before the Magnificent Seven there was FANG leading the way, which included Facebook (now Meta Platforms), Amazon, Netflix, and Google (now Alphabet); and then later FAANG, when Apple was added to the group. However, this shift shows that these leading tech stocks will change over time, and the Invesco QQQ ETF likely holds that next big tech winner among its holdings.

The great thing about the Nasdaq-100 index is that it is a market capitalization-weighted index that lets its winners run and its losers fall. Thus, the better a stock performs the larger a part of the index it becomes, while the worse it performs the smaller its position becomes. This goes against the natural instinct of many investors to sell their winners and add to their losers. However, there is often a good reason why winning stocks are performing well and climb to the heights they do.

Thus, investing in the Invesco QQQ ETF is going to let the best of the Magnificent Seven stocks rise to the top naturally and let any laggards slip out of the group naturally, with any potential replacement likely already lined up.

Wall Street street sign.
Image source: Getty Images.

Strong historical returns

The Invesco QQQ ETF has performed very well over the years. The index has an annual average return of 18.1% over the past 10 years, which easily surpasses the 12.4% return from the S&P 500 index over the same period. Over the past year, meanwhile, the ETF has risen 32.5%, outpacing the 22.7% return of the S&P. In fact, the ETF has outperformed the S&P 500 87% of the time over the past 10 years.

Given that we are in the early innings of a potential AI revolution, investing in growth-oriented tech stocks is a solid strategy. The Invesco QQQ ETF, meanwhile, is a great option for investors to consider. Investors don't have to worry about finding the big AI winners, as the index will naturally sort that out. It also gives investors some instant diversification with a tiny expense ratio of just 0.2%.

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.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $566,624!*

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 quadrupled the return of S&P 500 since 2002*.

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*Stock Advisor returns as of May 13, 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. Suzanne Frey, an executive at Alphabet, 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. Geoffrey Seiler has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Booking Holdings, Meta Platforms, Microsoft, Netflix, Nvidia, and Tesla. The Motley Fool 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.


39.

3 Things You Need to Know If You Buy the ProShares Ultra QQQ ETF Today

2024-05-18 15:39:00 by Anders Bylund, The Motley Fool from Motley Fool

Many investors don't try to hand-pick market-beating stocks. With index investing, you can benefit from the wealth-building long-term trends of the stock market with a single ticker. Many will settle for the broad S&P 500 (SNPINDEX: ^GSPC) index, tracked by the efficient Vanguard S&P 500 ETF (NYSEMKT: VOO) and SPDR S&P 500 ETF Trust (NYSEMKT: SPY) exchange-traded funds (ETFs).

That's a robust strategy, mirroring the strategy of investing genius Jack Bogle and recommended in The Fool's primer for beginning investors. Given a few decades of value-building patience, you're almost guaranteed to make a lot of money this way.

But some investors want a little more, and place a heavier bet on the growth opportunity of the tech sector. In that case, the Invesco QQQ Trust (NASDAQ: QQQ) mirrors the gains or losses of the tech-heavy Nasdaq-100 index. It's a higher-risk, higher-reward idea, tracking a smaller basket of more volatile stocks.

Then, you can amplify the resulting returns again by picking a leveraged ETF. For instance, the ProShares Ultra QQQ (NYSEMKT: QLD) aims to double the daily returns of the Nasdaq-100 index.

Given the Nasdaq index's tendency to outperform the S&P 500 in the long run, that sounds like a slam-dunk winner. It might be a good investment for you, but there are some things you should know before taking that extra-risky plunge. After all, your stock brokerage will invariably warn you that it's a risky pick before letting you buy the ETF -- and for good reason.

Volatility decay: The silent killer of gains

Holding the leveraged ETF long-term is like trying to carry water in a sieve. Sure, it aims to double the daily returns of the Nasdaq-100, but it also doubles your exposure to the whims of the market. Over time, the daily resetting of leverage means you're not just amplifying gains, but also losses. The process was never meant to reflect the underlying index's returns over long periods of time, and the match gets a little less perfect at the end of each market day.

Think of it like this: If the Nasdaq-100 takes two steps forward and one step back, the ProShares Ultra QQQ ends up doing a wild dance that might leave you dizzy and with fewer dollars in your pocket.

But that's not the whole story. The ProShares Ultra QQQ fund also comes with a high expense ratio of 0.95%, compared to the unleveraged ETF's 0.2%. The basic Nasdaq-100 tracker is a highly automated stock portfolio that actually owns stocks. The ProShares version is mainly based on stock options and futures, with a dash of pure accounting tricks. The basic QQQ fund is cheaper to run because it takes less work.

And don't forget the leveraged fund's low dividend yield: 0.15% versus QQQ's 0.58%, according to YCharts. It may not sound like much, but these costs can add up over time. It's like driving a sports car with the anchor down -- great fun over short distances, but a real drag in the long haul.

Amplified losses: A wild ride down

Remember 2022? The S&P 500 fell 18% lower amid economic chaos and inflation-fighting fears. The Nasdaq-100 took a nosedive with a 33% negative return. Now, imagine the ProShares Ultra QQQ ETF doubling that steeper drop, because that's kind of what it did -- in a long series of daily steps. By the end of the year, it had taken a 61% haircut.

QQQ Total Return Price Chart
QQQ Total Return Price data by YCharts

There are other examples to consider. Holding a 2x leveraged Nasdaq-100 fund was also a painful adventure during the mortgage meltdown of 2008.

^SPX Chart
^SPX data by YCharts

ProShares funds weren't around when the dot-com bubble popped, but I could imagine it roughly doubling the Nasdaq index's 36% drop in a year like 2000, followed by another 33% plunge in 2001. Taken together, the Nasdaq-100 fell 57% in those two years. The math starts to break down if you try to double that drop, highlighting the difference between detailed day-by-day moves and broad annual strokes.

I don't know when the next market meltdown will come, but it's only a matter of time -- and I sure don't want my nest egg invested in leveraged funds when it does.

Know when to hold

Trading leveraged ETFs like the ProShares Ultra QQQ requires sharp timing and market awareness. These funds are designed for short-term bets, capitalizing on daily market moves. If the market goes your way, it can yield significant gains, but you must be ready to exit quickly if it doesn't.

Unfortunately, that's the very definition of market timing.

At The Motley Fool, following the wise lead of master investor Warren Buffett, we generally don't recommend market timing. It's risky and often inconsistent. Even legends like Buffett will admit that they don't know what the market will do today, or next week, or next year -- only that it tends to rise over many years. Time in the market invariably beats trying to time the market.

Leveraged ETFs demand active management, contradicting the long-term, buy-and-hold strategy you see in The Motley Fool's fundamental investing lessons. But it's human nature to overestimate winners and ignore potential threats. Nailing the very top of the next market peak would be nice, but you can't count on it.

If you're not ready for high-stakes trading and quick decisions, leveraged ETFs might not be for you. Stick with well-chosen, diversified investments for long-term growth and stability. The Invesco QQQ Trust is one solid option, and you can't go wrong with the leading S&P 500 ETFs.

Should you invest $1,000 in ProShares Trust - ProShares Ultra Qqq right now?

Before you buy stock in ProShares Trust - ProShares Ultra Qqq, 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 ProShares Trust - ProShares Ultra Qqq wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $566,624!*

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 quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of May 13, 2024

Anders Bylund has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.


40.

Invesco Prioritizes ETF Innovation and Shareholder Focus

2024-05-17 12:00:00 by etf.com

Lucy Brewster


 

The 2024 etf.com Awards were a night of recognition for the ETF industry's best and brightest, and Invesco had a lot to celebrate with two ETFs nominated for the prestigious ETF of the Year award. Lucy Brewster had the opportunity to interview Factor & Core Equity Strategist, Chris Dahlin, to discuss his thoughts on the evening and the future of the ETF industry.  

Dahlin's excitement centered around the ETF of the Year category, where two Invesco products, the Invesco S&P 500 Equal Weight ETF (RSP) and the Invesco NASDAQ 100 ETF (QQQM), were nominated. "The fact that these two very different ETFs are both recognized," Dahlin observed, "reinforces the idea that the award isn't just about past performance, but about how well an ETF meets the needs of investors and complements their portfolios." 

When asked about the industry trends reflected in the awards ceremony, Dahlin pointed to a key theme: the evolution of established indices. "We're seeing a shift beyond traditional long-only exposure," he explained. "New products are leveraging derivatives to offer exposure to popular indices like the S&P 500 and the Nasdaq 100, but with additional features like income generation, downside protection, or defined outcomes.  

Looking toward the future, Dahlin expressed optimism about the industry's continued focus on shareholder well-being. "Even as the ETF industry experiences tremendous growth," he remarked, "there's a commitment to prioritizing investor outcomes. New product development reflects this focus, with ETFs designed to address specific investor needs and desires." 

Dahlin's message resonated with the night's overall spirit of recognizing innovation that benefits investors. As the ETF industry marches forward, it seems clear that a focus on shareholder value will remain a core principle. 




41.

3 Magnificent ETFs That Could Help You Beat the Market With Next to No Effort

2024-05-16 09:00:00 by Katie Brockman, The Motley Fool from Motley Fool

Investing in the stock market is a powerful wealth-building opportunity, but buying individual stocks can sometimes be tedious and time-consuming.

Exchange-traded funds (ETFs) can be a smart option for those looking for a simpler, no-fuss way to invest while still reaping the rewards of long-term gains. An ETF is a basket of securities bundled together into a single investment, making it easier to build a diversified portfolio with just one fund.

There are countless ETFs to choose from, all with their own advantages and disadvantages. While there are never any guarantees when it comes to the stock market, these three growth ETFs have a history of beating the market and could help maximize your long-term earnings.

1. Vanguard Growth ETF (VUG)

The Vanguard Growth ETF (NYSEMKT: VUG) contains 299 stocks with the potential for above-average growth. Around 56% of the fund is allocated to stocks in the tech sector, which can increase its growth potential -- as well as its risk.

Tech stocks, in general, tend to be more volatile than stocks in other industries. This is especially true during periods of market volatility. But they can also experience more explosive growth, helping supercharge your potential earnings.

While growth ETFs can often be hit harder than other funds during market downturns, they also tend to thrive when the market is surging. Over time, though, the positive returns should ideally outweigh the negatives, leading to above-average returns.

While past performance doesn't predict future returns, the Vanguard Growth ETF has a history of beating the market. Over the past 10 years, it's earned total returns of more than 114% -- compared to 81% for the S&P 500.

2. Schwab U.S. Large-Cap Growth ETF (SCHG)

The Schwab U.S. Large-Cap Growth ETF (NYSEMKT: SCHG) is similar to the Vanguard Growth ETF in many ways, except it's slightly more diversified. It contains 250 stocks, with around 46% allocated to the tech sector.

In general, a more diversified portfolio results in less risk. While this growth ETF still allocates nearly half of its composition to tech stocks, that's less than many other similar growth funds. It also contains more stocks in total than the Vanguard Growth ETF, which creates even more diversification.

To be clear, this investment still carries more risk than many other ETFs -- namely broad-market funds, such as S&P 500 ETFs or total stock market ETFs. But compared to other growth ETFs, SCHG has more total stocks and less of an emphasis on the tech sector.

Over the last 10 years, this ETF has managed to substantially outperform the S&P 500. Again, though, this doesn't necessarily mean it will continue seeing similar returns in the future, so it's wise to keep expectations in check when investing in growth ETFs.

3. Invesco QQQ Trust (QQQ)

Invesco QQQ Trust (NASDAQ: QQQ) is a prime example of a higher-risk, higher-reward growth ETF. It only contains 101 stocks, with a whopping 59% of the fund dedicated to the tech sector -- making it less diversified than the other two ETFs on this list.

QQQ also has the highest expense ratio at 0.20%, compared to 0.04% for both VUG and SCHG. While that may not seem like a significant difference, even a slightly higher expense ratio can add up to tens of thousands of dollars in fees over decades.

That said, QQQ has also earned the highest total returns of the ETFs listed here by a considerable margin. While these numbers are tempting, be sure you're willing to take on higher levels of risk before you invest in this ETF. Higher-risk ETFs can be incredibly volatile, so if you choose to buy, prepare yourself for more extreme ups and downs in the short term.

An important caveat about growth ETFs

While growth ETFs are designed to beat the market, there are no guarantees they'll actually do so. While ETFs, in general, carry less risk than investing in individual stocks, there's always a chance they could underperform.

Before you buy, consider your investing goals and priorities. If relative safety and security are your biggest targets, a broad-market fund may be a better option. These types of funds are much more diversified than growth ETFs and aim to track the market's performance over time, helping to reduce risk.

On the other hand, if you're comfortable with higher levels of risk and volatility in exchange for potentially higher returns, growth ETFs could be a good fit for your portfolio. There are no promises they'll earn above-average returns, but the right funds will have a better chance of outperforming the market over time.

Investing in growth ETFs can be a fantastic way to grow your portfolio with less effort, and you may even be able to beat the market if your fund performs well. By investing in the right places and keeping a long-term outlook, you could earn more than you might think.

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.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $559,743!*

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 quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of May 13, 2024

Katie Brockman has positions in Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool has positions in and recommends Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool has a disclosure policy.


42.

Equity ETFs Hit All-Time Highs as Inflation Cools

2024-05-15 21:21:13 by Sumit Roy from etf.com

Equity ETFs Hit All-Time Highs as Inflation Cools

U.S. stocks soared to all-time highs on Wednesday after the government reported better-than-feared inflation figures for April.

The $522 billion SPDR S&P 500 ETF Trust (SPY) jumped 1%, bringing its year-to-date gains up to nearly 12%.

Core consumer prices increased by 0.3% from March to April, according to the Bureau of Labor Statistics, the slowest pace of the year and equal to economists’ expectations.

On a year-over-year basis, the core CPI rose by 3.6%, the smallest increase in three years.  

While still higher than the Federal Reserve’s 2% inflation target, a month of as-expected inflation figures was a relief to investors who had witnessed three hotter-than-expected readings for January, February and March.  

April’s data boosted the notion that elevated inflation during the first quarter might have been a bump in the road and that price pressures would cool from here.

The 10-year and 30-year Treasury bond yields each dripped around 10 basis points on Wednesday, pushing the iShares 7-10 Year Treasury Bond ETF (IEF) and the iShares 20+ Year Treasury Bond ETF (TLT) up by 0.8% and 1.5%, respectively.

In April, the yield on the 10-year rose as high as 4.7% as investors speculated that the Fed might not cut rates at all this year and might instead raise interest rates as its next move.

Those fears abated on Wednesday. The pricing of Fed funds futures suggests that the central bank might cut rates two times this year—in September and December.

The S&P 500 fell as much as 5.5% from peak-to-trough during April. All of those losses and then some have been wiped out following today’s move.

The $267 billion Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100 also hit record highs on Wednesday. The tech-heavy exchange-traded fund is up 10.3% so far this year. 




43.

Major ETFs Rise on April CPI

2024-05-15 17:30:00 by James Rubin from etf.com

Inflation - Prices - Groceries - Basket

Major ETFs jumped higher in morning trading after the Consumer Price Index (CPI), a key inflation measure, arrived slightly lower than expected for April.

The U.S. Commerce Department reported that CPI rose 3.4% year-over-year and 0.3% from March. Core CPI, which strips away less volatile food and energy costs was 3.6%. 

Investors had eyed the latest report hopefully amid a few signs that inflationary pressure was finally relenting after a first quarter of unexpectedly hot readings. On Tuesday, although the Producer Price Index—another widely watched inflation gauge—rose more than expected in April, some of its components, including airfare, dipped, and the Commerce Department revised its March reading downward. Last week, jobless claims, which connects to price gains, rose for the first time in weeks. 

Factset's median estimate based on 11 separate forecasts called for a 3.4% CPI, down from 3.5% in March and the first sequential decrease since January.

Stocks rose following the report with the S&P 500 climbing 0.6%, the tech-heavy Nasdaq jumping 0.6%, pushing the tech-heavy index above its all-time high. The largest stock ETFs by assets under management, the SPDR S&P ETF Trust (SPY) and Vanguard 500 Index Fund (VOO) rose 1%, while the Invesco QQQ Trust (QQQ) increased 0.6%. 

Bitcoin, Gold, TLT Rise

Other risk-on assets also increased with bitcoin climbing more than 4%. 

Traditional safe haven asset gold, which has soared over the past six months, climbed 0.6%, pushing the SPDR Gold Shares ETF (GLD) higher 1%. The yield on a 10-year Treasury also dropped lower to 4.37%.  The iShares 20+ Year Treasury Bond ETF (TLT), a bond market proxy jumped more than 1%. TLT has risen more than 2% in May with net inflows of $550 million, partly on expectations that the CPI would offer some encouraging signs. 

Read More: TLT Investors Seek Redemption in CPI Inflation

Fed to 'Hold the Policy Rate Where It Is'

After cutting interest rates for 15 months, the U.S. central bank seemed well along in achieving its goal of 2% annual inflation, raising expectations that it could reverse this monetary hawkishness. But as the CPI and other indicators have stalled, the Federal Reserve has grown increasingly cautious about cutting rates, leaving them intact since last July. 

In announcing the bank's last policy decision on May 1, the Fed reiterated its commitment to base future decisions on data showing that inflation is "moving sustainably toward 2 percent."

On Tuesday in remarks at an event in Amsterdam shortly after the release of the latest PPI, Fed Chair Jerome Powell said it's unlikely "based on the data that we have, that the next move...would be a rate hike." 

"I think it's more likely that we'll be at a place where we hold the policy rate where it is," he said. 

 

 

 

 

 

 




44.

Wall Street just gave its highest forecast yet for the S&P

2024-05-15 16:04:23 by Josh Schafer from Yahoo Finance

Wall Street's high mark for stock market returns in 2024 keeps moving up.

BMO Capital Markets chief investment strategist Brian Belski boosted his year-end price target for the S&P 500 (^GSPC) to 5,600 from 5,100 in a research note on Wednesday, noting that momentum in the market is "likely to persist." Belski's 5,600 target reflects about 7% upside from Monday's close.

"We are comfortable with this because we believe the market is behaving in a similar fashion to 2021 and 2023 — years where we did not give enough credit to the strength of market momentum, something we are trying to avoid this time around," Belski wrote in a research note. 

Belski is the latest in a string of Wall Street strategists to chase the 2024 stock market rally higher with boosted year-end targets. The high-water mark on the Street entering the year was 5,200, with the median strategist target at 4,850.

But earnings have grown more than analysts have expected this year and US economic growth has largely surprised to the upside. Ten of the 15 strategists tracked by Yahoo Finance are now at or above 5,200 on year-end targets. 

The chug higher in stocks has come as investors have aggressively repriced their expectations for Federal Reserve interest rate cuts this year. After signs emerged that inflation isn't declining as quickly as economists hoped, investors are now pricing in roughly two interest rate cuts this year, down from a peak of nearly seven in early January, per Bloomberg data. 

This is in line with the Fed's most recent Summary of Economic Projections (SEP), which showed that most officials saw the central bank cutting interest rates either two or three times this year. 

"It has become clear to us that we underestimated the strength of the market momentum, particularly considering that investor expectations and Fed policy guidance have become essentially aligned vs. the significant disconnect that existed at the beginning of the year," Belski wrote. 

Charging Bull bronze sculpture in the Financial District of Manhattan, New York, United States, on October 23, 2022. The sculpture was created by Italian artist Arturo Di Modica in the wake of the 1987 Black Monday stock market crash.  (Photo by Beata Zawrzel/NurPhoto via Getty Images)
Charging Bull bronze sculpture in the Financial District of Manhattan, New York, United States, on October 23, 2022. The sculpture was created by Italian artist Arturo Di Modica in the wake of the 1987 Black Monday stock market crash. (Beata Zawrzel/NurPhoto via Getty Images)
NurPhoto via Getty Images

He acknowledges there will be bumps along the way for stocks. Using historical analysis, Belski believes that the market likely hasn't seen its worst drawdown of the year yet. Belski's work shows the average pullback during the second year of a bull market is 9.4%. April's recent pullback only reached just over 5%. 

But given the index's rally off the April lows, Belski is "now convinced that should a more severe pullback happen, it will likely occur at higher index levels than we previously anticipated," providing a higher landing spot for the S&P 500 after a rebound. 

And with the level of strength seen in stocks to start the year, history says further gains are likely ahead. In years where the S&P 500 rallies more than 8% in the first five months of the year, as it's currently pacing to do, the index gains more than 7% to finish the year 70% of the time, per Belski.

"Based on historical trends, performance this strong to start the year tends to continue through year end," Belski wrote. 

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


45.

Why the 2024 meme stock action is much tamer than 2021 — so far

2024-05-15 10:04:19 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

Meme stocks survived another volatility-fueled session Tuesday. 

Taking a page from the 2021 playbook, GameStop (GME) and AMC Entertainment (AMC) led the charge. 

Both meme stalwarts notched gains over 74% Monday and had further doubled their share prices on the open Tuesday — only to sell off most of the day into the close. Nevertheless, after dozens of volatility halts GameStop closed the day up 62% while AMC jumped by 30%.

Amid some gentle coaxing by Keith Gill (aka Roaring Kitty), a slew of names familiar to Reddit (RDDT) boards followed — companies like Koss (KOSS), Tupperware (TUP), Virgin Galactic (SPCE), Hertz (HTZ), and BlackBerry (BB).

But while the explosion in volatility rightfully invites comparisons to the well-known 2021 saga that played out on Reddit and across US stock exchanges, 2024 is already proving to be quite different. 

This year, Wall Street is driving the bus.

Vanda Research crunched the numbers and reported in a note to clients that GameStop and AMC have only seen a fraction of the inflows experienced in early 2021. Flows into these names at the peak of the early 2021 frenzy were over four times Monday's volume.

"Do we think more retail traders can jump in on the trend in the coming days? Yes. Do we think this is a repeat of 2021? No, and the chances we reach that stage are low," said Vanda.

Without glancing at a single stock chart, it's easy to point out that 2021 was likely a historical aberration fueled by bored recipients of pandemic stimulus checks. 

Wall Street was caught flat-footed. Hedge funds like Melvin Capital were obliterated. 

But institutional investors learned from the 2021 episode and are better prepared now, argues Vanda. 

"Quant/hedge funds are much better equipped to handle these situations nowadays," Vanda senior vice president Marco Iachini noted. "If anything, we believe the chances that they participate along with retail in the squeeze but also lean against and then exit these trades ahead of retail traders are high."

As of Monday's close, the portion of share turnover in GameStop attributable to retail investors averaged 7% over the prior five days — and that number was only slightly higher for AMC. In 2021, the averages and spikes were materially higher, indicating much greater participation by retail traders.

Data in the options market confirms a similar story.

But the biggest difference this year might just be the lack of one single, coherent narrative like the meme story that captured headlines in 2021.

Only last week, we wrote about the recent resurgence of volatility in meme names. "In a critical break from prior trading epochs, much of the recent meme stock volatility is being fueled by material news and fundamentals, like earnings, as opposed to Reddit posts," we wrote.

Meme stocks see two-day jump lead by GameStop, AMC
Meme stocks see two-day jump led by GameStop, AMC

Indeed, our (unofficial) Yahoo Finance meme stock heat map reveals impressive returns over the last two days that are mostly green across the board. But aside from GameStop and AMC, these daily returns are decidedly not triple digits as they were three years ago. 

In fact, the bigger names on this list — like Coinbase (COIN), Carvana (CVNA), and Palantir (PLTR) — have been making their gains the old-fashioned way: around earnings and bitcoin fundamentals.

morning brief image

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46.

Retire Before 50: 7 Must-Own Stocks for Accelerated Wealth Building

2024-05-15 10:00:00 by Omor Ibne Ehsan from InvestorPlace

Planning for retirement can be very scary and complicated for people, but it isn’t that hard once you have the basics covered. The biggest thing you need to account for is the inflation-adjusted returns and whether you will have enough money by the time you wish to retire. It’s a daunting task, but not an impossible one.

The stock market returns 7-8% annually on average, and you’re definitely going to need more than that to retire before 50 if you’re an average person. So, we’re essentially talking about stocks that can beat the market in the long run. No one has a crystal ball that can point out such stocks, but we have very good contenders in the market with promising futures. These are the potential higher-risk stocks that could turbocharge your portfolio and help you achieve your retirement goals ahead of schedule.

By investing in these promising companies, I would say you could squeeze out very high returns in the coming decades if they keep executing. Here are the seven stocks for early retirement to look into:

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Invesco QQQ (QQQ)

Invesco logo in blue with mountain imageSource: Shutterstock

If you want “market-beating” returns heading into the future, your best bet might be the Invesco QQQ (NASDAQ:QQQ). Yes, it is certainly more risky than a broader group of stocks, but tech stocks have been driving the bulk of the gains and form the core of most hedge funds nowadays.

This ETF is not a “stock,” but it tracks the performance of the Nasdaq-100. Big Tech accounts for 45% of QQQ. Many see that as a bearish factor, but I would disagree. Big Tech has locked in AI, quantum computing, cloud, and many other narratives that we don’t even know about. These companies are scooping up promising startups and have very sticky revenues as most people spend a huge chunk of their time online.

And of course, the best thing is that it uses a modified capitalization-weighted index, so your holdings will evolve with the trends.

Axon Enterprise (AXON)

Person holding mobile phone with logo of American weapon manufacturer Axon Enterprise Inc. on screen in front of webpage. Focus on cellphone display. Unmodified photo.Source: T. Schneider / Shutterstock.com

You’ll always have crime. Crime rates have been trending down so far, but the decline hasn’t been that pronounced in the past decade. Axon Enterprise (NASDAQ:AXON) provides police with “non-lethal” gear like bodycams, dashcams, dispatch software, and most importantly, the Taser. It is one of the best stocks for early retirement, at least in my opinion.

AXON segments. stocks for early retirement
Click to Enlarge
Source: Chart courtesy of GuruFocus.com

The stock has been delivering very healthy returns over the long run as the business has very sticky revenue sources.

Moreover, it recently acquired air defense startup Dedrone. This also makes it a great defense play since drones are heavily used in warfare now, and countering them is essential.

Moreover, their AI-assisted “Draft One” solution claims to cut a sizable 40% of officers’ time normally spent writing reports. With revenue growing 34.3% year-over-year to $461 million and earnings per share of $1.15 exceeding forecasts by 20 cents, it’s hard to not be bullish. Future estimates are also very bullish.

AXON revenue. stocks for early retirement
Click to Enlarge
Source: Chart courtesy of GuruFocus.com

Cadence Design Systems (CDNS)

A Cadence corporate office building has a sign with the company logo out frontSource: mrinalpal / Shutterstock.com

Cadence Design Systems (NASDAQ:CDNS) started the year on a mixed note. It missed revenue estimates by a hair. However, I’m confident the record $6 billion order backlog will lead to a solid year ahead, fueled by AI.

Order backlog tech CDNS. stocks for early retirement
Click to Enlarge
Source: Chart courtesy of GuruFocus.com

Cadence’s revenue of $1 billion came very close to estimates, and strong execution allowed earnings per share to exceed expectations at $1.17, which beat estimates by 4 cents. The company’s strategy of Intelligent System Design is also paying dividends. It is helping increase productivity for major clients like Intel (NASDAQ:INTC) and Qualcomm (NASDAQ:QCOM) through AI solutions that can design new systems by itself.

Moreover, Cadence seems to be firing on all cylinders with the recent launch of its third-generation emulation and prototyping platforms receiving endorsements from Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD).

The stock is up a solid 314% in the past five years and has been very stable and consistent as it climbs. Now, where it goes from here in 20 years depends a lot on AI, but I remain optimistic.

Trane Technologies (TT)

illustration of a thermometer with red temperature gauge rising and blue sky with sun in backgroundSource: shutterstock.com/Marian Weyo

Trane Technologies (NYSE:TT) is a newer company. It focuses on air conditioners and similar products. If we continue seeing summers like the one in 2023, AC companies are going to be among the best investments going forward. They already have delivered tremendous returns.

Plus, it’s hard to not be bullish after looking at its chart, as TT stock has outperformed the broader market by stellar figures. It is up 249% in the past five years and the “exponential” trend makes me optimistic. It also has a 1% dividend yield to sweeten the deal. I expect the uptrend to continue in the long run as its top and bottom lines keep expanding.

TT EPS Revenue estimates. stocks for early retirement
Click to Enlarge
Source: Chart courtesy of GuruFocus.com

The company’s stronger-than-expected top-line performance was propelled by its commercial heating, ventilation, and air conditioning business, which witnessed bookings increase by over 30%. With the order backlog increasing 10% sequentially to $7.7 billion, including $1.8 billion for orders to be fulfilled in 2025 and beyond, I have a very good conviction here.

Management also raised their projections for the full year. I wouldn’t be amazed to see estimates continue climbing higher if this momentum sustains.

Xiaomi (XIACF)

women1600Source: Shutterstock

Xiaomi (OTCMKTS:XIACF) is one of the top tech companies that very few people talk about. It is an under-the-radar pick among these seven stocks for early retirement. You may know Xiaomi phones, but this company sells a lot more. It is a diversified electronics company that has a hold on many emerging markets, especially in Asia. The company’s products are affordable for people in these regions, and the brand has a good reputation.

The stock declined along with the broader Chinese market but is making a sharp comeback as the Chinese market recovers. It is up 28% year-to-date. Nearly half its sales are also from outside of China.

XIACF sales by region. stocks for early retirement
Click to Enlarge
Source: Chart courtesy of GuruFocus.com

Its latest quarterly results paint a very positive picture. Revenue increased 11% YOY to RMB 73.2 billion, fueled by an impressive 28% market share in China’s premium RMB 4,000-6,000 segment. Their strategic focus on high-end products is clearly paying off, with the Xiaomi 14 Series breaking multiple sales records and the 14 Pro model attracting many new customers above the 5K price point.

I expect stellar 20-year returns from here if the trends continue.

MakeMyTrip (MMYT)

Plane travel. Man standing in airport waiting for flight. travel stocks to buySource: Olena Yakobchuk / Shutterstock

MakeMyTrip (NASDAQ:MMYT) is an Indian online travel company. India is still much behind China, but its economy has been growing fast. A huge wave of people are getting out of poverty each year and are taking vacations.

As India’s domestic aviation industry prepares to nearly double passenger capacity over the next eight years, MakeMyTrip seems ideally positioned to capture an even greater share of the expanding market.

Looking ahead, forecasts indicate India’s outbound travel market will be among the fastest-growing components globally. With international bookings already surpassing pre-pandemic highs, it wouldn’t be surprising to see MakeMyTrip’s overseas segment play a major role. This industry leader appears to be excellently capitalizing on very strong tailwinds over the next two decades. Analysts expect EPS to almost triple from 62 cents to $1.78 and revenue to surge from $794 million to $1.2 billion over the next two years. Analyst ratings are bullish too.

MMYT analyst ratings. stocks for early retirement
Click to Enlarge
Source: Chart courtesy of GuruFocus.com

Deckers Outdoors (DECK)

Deckers Outdoor (DECK) logo displayed on smartphone screenSource: shutterstock.com/Piotr Swat

Deckers Brands (NYSE:DECK) is a footwear company. It has delivered very stellar returns of 497% over the past five years. The moat here is surprisingly solid, though I expect the stock to grow at a more moderate pace in the coming years.

Revenue reached $1.56 billion in Q4, up an impressive 16% from the same period last year. What really stood out was the exponential growth in their direct-to-consumer sales, which rose 23% to an all-time high of 55% of the total business.

DECK segments. stocks for early retirement
Click to Enlarge
Source: Chart courtesy of GuruFocus.com

What makes me very bullish is that it beat EPS expectations by 31% and revenue expectations by 7.3% in Q4. If such beats continue, I expect the stock’s momentum to continue running hot. Definitely one of the best stocks for early retirement.

On the date of publication, Omor Ibne Ehsan did not hold (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.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

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47.

Fed's Powell: 'We'll need to be patient' on rates

2024-05-14 15:23:25 by Josh Schafer from Yahoo Finance

Fed Chair Jerome Powell said Tuesday his confidence that inflation will keep cooling is not as high as it was at the start of the year, and that the central bank will need to be patient before lowering interest rates.

"We did not expect this to be a smooth road, but these [inflation readings] were higher than I think anybody expected," Powell said during a panel in Amsterdam. "What that has told us is that we'll need to be patient and let restrictive policy do its work."

Powell said that he expects inflation will move back down on a monthly basis to levels that were more like the lower readings of late last year.

"[But] I would say my confidence in that is not as high as it was having seen these readings in the first three months of the year."

Powell's comments came just hours after a fresh reading on wholesale prices for April came in hotter than expected. 

Wholesale prices increased 0.5% month over month in April, above the 0.3% consensus had expected, per the latest release of the Producer Price Index, which measures prices producers receive for goods produced.

"Core" PPI, which strips out the volatile food and energy categories, also rose 0.5% in April, above estimates for a 0.2% increase. 

Notably, however, March's monthly price increase was revised lower to a decrease of 0.1% from an initial reading of a 0.2% increase.

"I would say [the PPI reading was] actually quite mixed," Powell said Tuesday. "You know, the headline numbers were higher, but they were backward revisions ... I wouldn't call it hot."

In terms of when the Fed will cut interest rates, Powell noted the Fed's current restrictive stance may take "longer than expected to do its work and bring inflation down."

"I do think it's really a question of keeping policy at the current rate for a longer time than had been thought," Powell said.

Powell's rhetoric fell in line with recent commentary from other Fed officials. On Monday, Fed Vice Chair Philip Jefferson said the Fed would need "additional evidence" inflation is falling to the Fed's 2% target before cutting interest rates. 

“Until we have that, I think it is appropriate to keep the policy rate in restrictive territory," Jefferson said said during a question and answer session at the Cleveland Fed.

U.S. Federal Reserve Chair Jerome Powell attends a press conference in Washington, D.C., the United States, on May 1, 2024. The U.S. Federal Reserve on Wednesday left interest rates unchanged at a 22-year high of 5.25 percent to 5.5 percent as recent consumer data indicates that inflation continued to tick up. (Photo by Liu Jie/Xinhua via Getty Images)
Federal Reserve Chair Jerome Powell at a May 1 press conference. (Liu Jie/Xinhua via Getty Images)
Xinhua News Agency via Getty Images

Powell's comments came ahead of another reading of inflation on Wednesday morning, with the release of the April Consumer Price Index (CPI) expected at 8:30 a.m. ET. 

Wall Street expects an annual gain of 3.4% for headline CPI, which includes the price of food and energy, a decrease from the 3.5% headline number in March. Prices are set to rise 0.4% on a month-over-month basis, in line with March's rise.

On a "core" basis, which strips out food and energy prices, inflation is expected to have risen 3.6% year over year, a slowdown from the 3.8% increase seen in March. Monthly core price increases are expected to clock in at 0.3%, down from 0.4% in the prior month.

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48.

Inflation and consumer spending updates ahead: What to know this week

2024-05-13 10:13:29 by Josh Schafer from Yahoo Finance

Stocks rallied during a quiet week for economic data on Wall Street. 

The Nasdaq Composite (^IXIC) rose just under 1% while the S&P 500 (^GSPC) popped almost 2%. The S&P 500 ended Friday back above 5,200 for the first time since early April. Meanwhile, the Dow Jones Industrial Average (^DJI) rose more than 2% on the week and has closed higher for eight straight sessions.

In the week ahead, a crucial April inflation reading and an update on retail sales will highlight the economic calendar. Initial jobless claims will also be in focus after the weekly data set hit a surprise nine-month high in the first week of May.

On the corporate side, Walmart (WMT), Home Depot (HD), and Alibaba (BABA) lead a quieter week of quarterly reports as earnings season slows down. 

Stickier-than-expected inflation reports headlined the first quarter of economic data, prompting investors to scale back expectations for Federal Reserve interest rate cuts in 2024. 

On Wednesday, investors will get their first look at whether this trend continued into the second quarter with the release of the April Consumer Price Index (CPI). Wall Street expects an annual gain of 3.4% for headline CPI, which includes the price of food and energy, a decrease from the 3.5% headline number in March. Prices are set to rise 0.4% on a month-over-month basis, in line with March's rise. 

On a "core" basis, which strips out the food and energy prices, inflation is expected to have risen 3.6% year over year, a slowdown from the 3.8% increase seen in March. Monthly core price increases are expected to clock in at 0.3%, down from 0.4% in the prior month. 

Morgan Stanley's economics team led by Ellen Zentner wrote in a research note that it believes inflation's descent "begins" with the April CPI report, led by easing price pressures in car insurance, rent, and healthcare. This, Zentner's team argues, could keep three Fed interest rate cuts on the table this year. 

"Weaker monthly prints ahead with faster disinflation starting in [the second half of 2024] provides the Fed the confidence it needs that inflation is on a sustained path toward target," the Morgan Stanley team wrote. 

This would likely be a welcome sign for markets, according to Fundstrat's head of research Tom Lee. 

"We think April CPI could push higher the number of Fed cuts [priced into the market]," Lee wrote in a note to clients on Friday. This, Lee said, would be a "positive for stocks."

Entering the week, markets are currently pricing in less than two interest rate cuts this year, per Bloomberg Data. 

With the Fed holding interest rates high for longer, economists continue to watch closely for any signs that the resilience in consumer spending is dwindling.

A fresh reading on that trend is set to greet investors on Wednesday with the April retail sales report. Economists expect that retail sales increased 0.4% in April from the prior month, down from a 0.7% increase seen in March. 

Investors will also be closely watching results from Home Depot (Tuesday) and Walmart (Thursday) for signs of how the US consumer is holding up. Thus far, results from corporates have provided mixed results on how Americans are spending. 

"Spending data have continued to surprise to the upside, but we get the sense households are increasingly prioritizing purchases," Wells Fargo's team of economists wrote in a weekly research note. "Although volatile, non-discretionary categories have outpaced discretionary on trend for the past year. Industry comments included in Q1 earnings releases also emphasized a consumer trading down in search for value."

Customers buys vegetables inside the Walmart Supercenter in North Bergen, Thursday, Feb. 9, 2023, in New Jersey. (AP Photo/Eduardo Munoz Alvarez)
Customers buy vegetables inside the Walmart Supercenter in North Bergen, Thursday, Feb. 9, 2023, in New Jersey. (AP Photo/Eduardo Munoz Alvarez)
ASSOCIATED PRESS

With 92% of the S&P 500 done reporting first quarter earnings, the index is pacing for its highest year-over-year earnings growth since the second quarter of 2022. As of Friday afternoon the S&P 500 is on pace for earnings growth of 5.4% in the first quarter, notably above the 3.2% expected entering bank earnings in early April.

FactSet senior earnings analyst John Butters points out that the index is actually doing even better when removing a massive earnings miss from just one company. Bristol-Myers Squibb (BMY) reported a first quarter loss, dragging down the S&P 500's total performance this quarter. Excluding the healthcare company, the S&P 500 is pacing for 8.3% growth, per Butters. 

Since inflation began spiking in 2021, the stock market has gone through fits and starts in how it reacts to economic data. And that's carried on in 2024. 

In a weekly note to clients, Citi US equity strategist Scott Chronert examined how stocks are reacting to hotter-than-expected economic data. Investors started the year cheering the data as they priced in a "soft landing" for the US economy, where inflation would return to the Fed's 2% target without an economic downturn. At that time, the S&P 500 moved higher with Citi's Economic Surprise Index, which gauges whether data is coming in better than consensus expectations. 

But after recent hot inflation data, markets have been more skittish as investors have increasingly priced in "no landing," where inflation doesn't come down to the Fed's target but the economy keeps growing.

This had led to the market perceiving good economic news to be bad news for inflation, and therefore bad for the market's rate cut hopes. Subsequently, the correlation between the S&P 500 and economic surprise has headed toward negative territory.

"This suggests hot macro data has increasingly threatened the soft landing narrative that may be needed to push markets higher from these elevated valuation levels," Chronert wrote. 

If inflation data returns to showing further cooling, the question is whether good economic growth news will be once again welcome by the market. 

Economic data: New York Fed one-year inflation expectations, April (3% previously)

Earnings: BuzzFeed (BZFD), Petrobras (PBR), Stone (STNE), Tencent Music Entertainment (TME)

Economic data: NFIB Small Business Optimism, April (88.2 expected, 88.5 previously); Producer Price Index, month-over-month, April (+0.3% expected, +0.2% previously); PPI, year-over-year, April (+2.2% expected, 2.1% previously)

Earnings: Alibaba (BABA), Home Depot (HD), Canoo (GOEV), Rumble (RUM), Sony (SONY), 

Wednesday

Economic data: Consumer Price Index, month-over-month, April (+0.4% expected, +0.4% previously); Core CPI, month-over-month, April (+0.3% expected, +0.4% previously); CPI, year-over-year, April (+3.4% expected, +3.5% previously); Core CPI, year-over-year, April (+3.6% expected, +3.8% previously); Real average hourly earnings, year-over-year, April (+0.6% previously); MBA Mortgage Applications, week ending May 10 (+2.6%); Retail sales, month-over-month, April (+0.4%% expected, +0.7% previously); Retail sales ex auto and gas, April (+0.1% expected, +1% previously); NAHB housing market index, May (51 expected, 51 previously)

Earnings: Cisco (CSCO), Dole (DOLE), Monday.com (MNDY), Super League (SLE)

Economic data: Initial jobless claims, week ending May 11 (233,000 previously); Housing starts month-over-month, April (8.6% expected, -14.7% prior); Building permits month-over-month, April (+1.6% expected, -3.7% prior); Philadelphia Business Outlook, May (8.7 expected, 15.5 prior); Import prices, month-over-month, April (+0.2% expected, +0.4% previously); Export prices, month-over-month, April (+0.2% expected, +0.3% previously); Industrial production, month-over-month, April (+0.2% expected, +0.4% previously)

Earnings: Walmart (WMT), Applied Materials (AMAT), Baidu (BIDU), JD.com (JD), John Deere (DE), Take-Two Interactive (TTWO), Under Armour (UAA)

Economic data: Leading index, April (-0.2% expected, -0.3% previously)

Earnings: No notable earnings. 

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

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49.

Forget the S&P 500 -- Buy This Magnificent ETF Instead

2024-05-13 08:00:00 by Neil Patel, The Motley Fool from Motley Fool

It's no surprise that most investors look at the S&P 500 when trying to assess how the stock market has performed over a certain period of time. This index of the 500 largest and most profitable U.S. companies has many popular exchange-traded funds (ETFs) that track its performance.

The S&P 500 has produced a 235% total return in the past 10 years. That's a respectable track record, but there's one magnificent ETF that has absolutely crushed that performance.

A remarkable performance

If you invested $1,000 in an S&P 500 ETF a decade ago (and reinvested any dividends), you'd have about $3,350 today. But had you put that same amount in the Invesco QQQ Trust (NASDAQ: QQQ), you'd be sitting on $5,170 now, translating to a superb total return of 417%.

The striking difference between these two results is due to the composition of this particular ETF. The Invesco QQQ Trust consists of the largest 100 companies (excluding financial stocks) trading on the Nasdaq stock exchange. These companies lean toward innovative and disruptive enterprises with 59% and 18% of the fund's portfolio falling in the technology and consumer discretionary sectors, respectively.

These industries generally exhibit much better growth potential than the average S&P 500 constituent. The flipside of this situation is they also carry more expensive valuations.

It has helped, especially in recent times, that the Invesco QQQ Trust has an extremely high concentration in the "Magnificent Seven." These tech giants have been huge winners over the past several years, thanks to broad secular trends working in their favor.

Focus on the details

The beauty of ETFs is that not only do they provide investors with broad exposure, but they often do so at a low cost. The expense ratio of the Invesco QQQ Trust is just 0.20%. So, for every $1,000 you have invested in the ETF, you're paying $2 in annual fees.

By comparison, consider the Ark Innovation ETF, Cathie Wood and Ark Invest's flagship investment product, which currently has $7.8 billion in assets. The Ark Innovation ETF has generated a 7% loss in the past five years, lagging far behind the Invesco QQQ's 139% return over the same period. However, the Ark ETF has an expense ratio of 0.75%, nearly four times that of the Invesco ETF. The combination of strong returns and low fees is what makes the Invesco QQQ Trust so attractive.

There's another benefit to investing in an ETF: the simple fact you don't need any special skills or knowledge to put your money to work in the market. Identifying individual stocks and establishing a diversified portfolio of those stocks requires significant time and effort. Adopting a low-maintenance investment like this can also help you stay the course over the long term.

Buying at the highs is still the right decision

As of this writing, the Invesco QQQ Trust is sitting near its all-time high. The stock market has had a terrific run since the start of 2023, boosting many tech stocks along the way.

You may be wondering if now is still a good time to invest. To get straight to the point: Yes, it is. It's natural to worry the ETF could decline in the near term -- that's especially the case given the many factors influencing the market right now, including major geopolitical conflicts, inflation, and the upcoming U.S. presidential election. You may be tempted to wait for a pullback before investing.

The issue, however, is it's incredibly difficult to correctly time your investment to avoid the worst days and capture the best days. But if you have a time horizon that spans years or even decades, it matters far less where you start. The most important thing is getting started in the first place.

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.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $550,688!*

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 quadrupled the return of S&P 500 since 2002*.

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*Stock Advisor returns as of May 6, 2024

Neil Patel has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.


50.

3 Top ETFs for a Diversified Stock Portfolio

2024-05-12 14:30:00 by George Budwell, The Motley Fool from Motley Fool

Navigating the stock market can be overwhelming, with the need for extensive research, continuous monitoring of market trends, and the inherent risks involved. For those seeking market exposure without the complexities of individual stock selection, exchange-traded funds (ETFs) offer a streamlined solution.

A well-chosen set of ETFs can provide comprehensive coverage of the market's key sectors, including large-cap growth, tech innovation, and small-cap potential. Here is an overview of three popular ETFs that offer broad coverage and outstanding long-term performance.

An investor working at a desk.
Image Source: Getty Images.

1. SPDR S&P 500 ETF Trust

The SPDR S&P 500 ETF Trust (NYSEMKT: SPY) mirrors the S&P 500 Index, encompassing 500 of the largest U.S. corporations. Since its launch in 1993, the SPY has achieved a cumulative return exceeding 2,000%, dividends included.

With an expense ratio of just 0.09%, the SPY stands out for its cost efficiency, significantly undercutting the category average by 88.6%. While not the absolute lowest among its peers--Vanguard's S&P 500 ETF claims that distinction-- the SPY's affordability is notable.

SPY's trading volume is immense, averaging around 70 million shares daily. This liquidity has made it a favorite among day traders and those seeking income through derivatives. The ETF's trading activity is so robust that it has fostered a dedicated community of SPY options traders.

2. Invesco QQQ Trust

The Invesco QQQ Trust (NASDAQ: QQQ) tracks the Nasdaq-100 Index, which includes the 100 largest non-financial companies on the Nasdaq exchange. The QQQ's expense ratio comes in at 0.20%, higher than some passively managed funds but still well below the 0.98% category average.

The QQQ is also known for its liquidity, with nearly 45 million shares changing hands on an average day. This makes it a prime choice for active traders and those with substantial investments.

Over the last decade, the QQQ has delivered an impressive average annual return of 18.8%, outpacing the SPY's 10.8% average. However, the QQQ's tilt toward tech stocks makes it riskier and more volatile than the SPY.

3. iShares Russell 2000 ETF

The iShares Russell 2000 ETF (NYSEMKT: IWM) targets the Russell 2000 Index, which is composed of small-cap American companies. Over the past ten years, the IWM has delivered average annual returns of 7.8%, including dividends.

While its performance has been more modest compared to SPY and QQQ, small-cap stocks have historically led the market. Should this trend resume once interest rates fall, the IWM is poised to take flight.

The IWM's expense ratio is 0.19%, which, although not the lowest for small-cap ETFs, is substantially less than the 1.00% category average. The ETF enjoys high liquidity, with roughly 34 million shares traded daily, yet it carries a fairly substantial risk profile due to its focus on smaller companies.

Final thoughts

These three ETFs--SPY, QQQ, and IWM--provide investors with a diversified approach to the stock market, covering the spectrum from large-cap stability to tech innovation to small-cap growth. They cater to investors aiming for a balanced investment portfolio that taps into various market segments.

As with any investment, though, it's crucial to align your ETF selections with your personal investment goals and risk tolerance. To lower your risk profile, for example, you could swap out the QQQ or IWM for a low-risk bond fund.

Should you invest $1,000 in SPDR S&P 500 ETF Trust right now?

Before you buy stock in SPDR S&P 500 ETF 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 SPDR S&P 500 ETF Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $550,688!*

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 quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of May 6, 2024

George Budwell has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.