Wall Street seems to be in a tug of war between the bull and the bear. After hitting an all-time closing high on Aug 3 and then declining around 0.5% on Aug 4, the S&P 500 index once again rose to an all-time high in yesterday’s trading session. Investors seem to be cheering the impressive earnings season but are at the same time bothered about the rising spread of the delta variant. However, all eyes will be on the jobs report for July which is scheduled to release on Aug 6. It is going to be the key factor that will impact the Federal Reserve’s fiscal and monetary policy decisions, per a CNBC article.
Meanwhile, there is no doubt that the second-quarter 2021 earnings season is going strong. It is worth noting here that the earnings season has already seen better-than-expected results, stimulating the rally in stock markets. Per FactSet data, 88% of the S&P 500 companies have reported an earnings surprise (per a CNBC article).
However, investors are worried about the sustainability of the economic and earnings growth achieved so far since the pandemic-led slump. Also, the United States is seeing a rising number of new delta variant cases. It has witnessed a seven-day moving average of about 72,790 new cases per day on Jul 30, per Centers for Disease Control and Prevention (CDC) data and as mentioned in a CNBC report.
Considering the current market conditions, let’s take a look at some ETF areas that can be good investment options for August:
The pandemic has triggered a race to introduce vaccines and treatment options, opening up investing opportunities in the biotech sector over the past year. Thus, the sector has remained a hot investment space.
The delta variant is a serious concern as the number ofnew cases arising from the variant is being mostly observed among the unvaccinated population. In order to combat the situation, President Joe Biden has informed about some new initiatives to improve the vaccination rate. One of the measures include making it mandatory for all federal employees to attest to being vaccinated or deal with strict protocols, according to a CNN report.
Major companies are also making it mandatory for their employees to get vaccinated before returning to company campuses. Important names like Google (GOOGL), Facebook (FB), Netflix (NFLX) and BlackRock can be safely added to the list of companies with a vaccine mandate.
Against the backdrop, let’s look at some poplar biotech ETFs that investors can keep an eye on like VanEck Vectors Biotech ETF BBH, iShares Biotechnology ETF IBB, SPDR S&P Biotech ETF XBI and First Trust NYSE Arca Biotechnology Index Fund (FBT) (read: Sanofi to Buy mRNA Developer: ETFs in Focus).
The technology sector has largely shown strong resilience to the pandemic, rewarding investors with solid returns. As the U.S. economy was reopening, an increasing number of American shoppers were seen to be visiting stores for some retail therapy. However, with the surging delta variant cases, shoppers are believed to again resort to online shopping.
Certain other ‘new normal’ trends have also emerged amid the health crisis like work from home, increasing digital payments, growing video streaming as well as soaring video game sales. The pandemic is also a boon for the e-commerce industry as people continue staying indoors and shopping online for all essentials, especially food items.
Technology continues to plan an instrumental role amid the ongoing COVID-19 uncertainty in aiding people to maintain safe-distancing norms. Thus, investors could consider the following ETFs like Vanguard Information Technology ETF VGT, The Technology Select Sector SPDR Fund XLK, iShares U.S. Technology ETF IYW and First Trust NASDAQ-100-Technology Sector Index Fund (QTEC) (read: Tech ETFs to Gain on Upbeat Apple, Microsoft Earnings).
COVID-19 Themed ETFs
Health experts have claimed the delta variant to be twice as infectious as the original COVID-19 strain, according to the verified sources. The resurging cases have scared investors as they fearthatimplementation of new lockdown measures to control the spread may hurt the global economic recovery achieved so far. In particular, stocks that were gaining from the re-opening of the economy, belonging to sectors like travel, energy, industrial, materials and retail, are likely to beimpacted.
It feels like the rest of 2021 will continue to bear the brunt of the pandemic, before majority of Americans are vaccinated and therefore, a COVID-themed ETF could be a smart pick. Against this backdrop, there have been some launches,keeping the pandemic in focus like Direxion Work From Home ETF WFH, Global X Telemedicine & Digital Health ETF EDOC, Global X Education ETF EDUT, Pacer BioThreat Strategy ETF (VIRS) and ETFMG Treatments Testing and Advancements ETF (GERM) (read: Delta Variant to Spark Rally in Stay-At-Home ETFs).
Dividend Aristocrat ETFs
Dividend aristocrats are blue-chip dividend-paying companies with a long history of increasing dividend payments year over year. Moreover, dividend aristocrat funds provide investors with dividend growth opportunities in comparison to other products in the space but might not necessarily have the highest yields.
‘Dividend aristocrats’ or ‘dividend growers’ are mostly deemed to be the smartest way to deal with market turmoil. Notably, the inclination toward dividend investing has been rising due to easing monetary policy on the global front, and market uncertainty triggered by the pandemic and deceleration in global growth.
These products also form a strong portfolio, with a higher scope of capital appreciation as against simple dividend-paying stocks or those with high yields. As a result, these products deliver a nice combination of annual dividend growth and capital-appreciation opportunity and are mostly good for risk adverse long-term investors.
Against this backdrop, let’s take a look at some ETFs that investors can consider like Vanguard Dividend Appreciation ETF VIG, SPDR S&P Dividend ETF SDY, iShares Select Dividend ETF DVY and ProShares S&P 500 Dividend Aristocrats ETF NOBL (read: Dividend ETFs Scaling New Peaks on Bull-Bear Play).
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.