Wall Street has been in great shape this year. Solid U.S. economic data points, massive fiscal stimulus and widespread vaccination led to this upsurge despite the surge in yields that occasionally shoved back the high-growth sectors. At the current level, the S&P 500 and the Dow Jones have been hovering around the all-time high levels. And why not?
The March jobs data came in better than expected. Revisions added 156,000 jobs to the totals for January and February. Unemployment dropped to a pandemic low of 6%. The U.S. manufacturing index jumped to a 38-year high. President Joe Biden’s $2.3 trillion infrastructure plan followed by the rollout of the $1.9-trillion COVID-19 relief bill contributed to the Wall Street rally.
Americans are growing more confident about the economy given that the University of Michigan’s final sentiment index climbed to a pandemic high of 84.9 in late March from a preliminary reading of 83. The Conference Board on the consumer confidence index also jumped to 109.7 in March — the highest level since the onset of the pandemic in March 2020 (read: ETFs to Gain as US Consumer Confidence Hits One-Year High).
Meanwhile, the Fed also indicated keeping rates at the rock-bottom level until 2023, at least. The Fed also bumped up its 2021 GDP growth forecast from 4.2% in December to 6.5% in March and beefed up the 2022 growth forecast from 3.2% to 3.3%. The Fed projected the longer-run growth measure at 1.8%. Unemployment was guided down to 4.5% from 5.0% for 2021, 3.9% from 4.2% for 2022 and 3.5% from 3.7% for 2023 (read: 4 ETFs to Play Rising Inflationary Pressures).
The JPMorgan Chase (NYSE:JPM) chairman and CEO, Jamie Dimon, is bullish on the U.S. economy and expects the ongoing economic revival to move into 2023, as quoted on CNBC. Increased built-up of consumer savings thanks to unprecedented fiscal and monetary stimulus, rapid vaccination and sheer relief of the end of a pandemic will help the economic revival to continue over the medium term (read: Economic Boom to Go Into 2023? ETFs to Play).
No wonder, such optimism has boosted several sectors and the related ETFs to all-time highs along with the broader market. Below we highlight a few of them:
Homebuilding
New home sales increased 8.2% year over year in February and existing homes sales were also up 9.1%, suggesting robust times for the homebuilding industry. Plus, the surge in bond yields has moderated in recent times. Both factors have boosted the demand for homebuilding ETFs.
US Home Construction iShares ETF ITB – Up 426.7% past 10 years
S&P Homebuilders SPDR XHB – Up 287.1% past 10 years
Consumer Discretionary
A blowout jobs report, massive monetary and fiscal stimulus, still-low oil prices, and upbeat U.S. consumer confidence point to strength in consumer discretionary stocks.
US Discretionary Spending iShares Evolved ETF IEDI – Up 86.4% since inception in March 2018
S&P 500 EW Consumer Discretionary Invesco ETF RCD – Up 192.7% past 10 years
Technology
Tech stocks have upbeat long-term potential. The rising virus cases globally will prolong the work-learn-shop-from-home culture and drive the demand for digitization. Plus, subdued bond yields in April rekindled the demand for tech stocks.
S&P 500 Technology Sector SPDR XLK – Up 430.2% past 10 years
US Technology iShares Evolved ETF IETC – Up 121.0% since inception in March 2018
Industrials
The ongoing economic boom and infrastructure plan has every reason to result in increased industrial activity, thereby driving the sector higher.
US Industrials iShares ETF IYJ – Up 199.0% past 10 years
Global Industrials iShares ETF EXI – Up 98.5% past 10 years
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