S&P 500 Near Record Close: 3 Winning Sectors & ETFs

Wall Street got charged up on Aug 12 on vaccine and further stimulus hopes as well as better-than-feared second-quarter earnings. The benchmark index S&P 500 thus gathered momentum to hit a record close at one point, rising as much as 1.6% at intraday highs. However, the index failed to keep up the momnetum though and ended the day at 3,380.35. The S&P 500 last reached a record close of 3,386.15 prior to the coronavirus mayhem on Feb 19.

On the virus front, fears are subsiding. Virus-related hospitalizations in Texas dropped to the lowest level on Aug 12 since early July, and hospitalizations in California also exhibited a downtrend, with Governor Gavin Newsom suggesting that the state was “turning the corner” on the pandemic, as quoted on Yahoo Finance.

Among other positive developments, President Trump announced that the U.S. government will buy 100 million doses of its coronavirus vaccine. Tesla (NASDAQ:TSLA) TSLA shares jumped 13.1% on Aug 12 after the company announced a five-for-one stock split. WTI crude ETF United States Oil Fund (NYSE:USO), LP USO gained 2.5% after a report said that American crude stockpiles declined last week, as noted by a Business Insider article.

Let’s take a look which sectors added the most to the rally. Per a Yahoo Finance article, the following three sectors helped the blue-chip index to move closer to its record close on Aug 12.

Information Technology

The sector gets about a one-fifth share of the S&P 500. Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) – all rallied and gained at least more than 2% on Aug 12. Technology stocks and ETFs have been the star performers of this year. The coronavirus outbreak could not take the sheen out of this sector, rather added more to it. Social distancing norms enacted globally to mitigate the spread of the virus compelled people to stay at home, binge on online shopping and work as well as learn from home (read: Top Sector of 1H & Its Top ETFs).

Some of the prominent tech ETFs of the past week are Technology Select Sector SPDR Fund XLK, ProShares S&P Technology Dividend Aristocrats ETF TDV,iShares PHLX Semiconductor ETF (SOXX) and Defiance Next Gen Connectivity ETF (FIVG).

Healthcare

The sector is extremely busy with coronavirus vaccine and treatment. The World Health Organization has recognized some 10 prime candidates for vaccines as these have entered clinical trials. Plus, 114 candidate vaccines are in the preclinical evaluation stage. Moderna (NASDAQ:MRNA), AstraZeneca (NYSE:AZN), Pfizer (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ) are some of the prominent names in the vaccine research field, whose candidates are showing promise.

Healthcare stocks take about 14.9% of the index. SPDR S&P Health Care Services (NYSE:XHS) ETF XHS, iShares U.S. Healthcare Providers ETF IHF and Health Care Select Sector SPDR Fund XLV are some of the ETFs that have been enjoying a high momentum currently (read: COVID-19 Vaccine Push Brings Hope: Stock & ETF Beneficiaries).

Consumer Discretionary

Consumer discretionary, which takes about 10% of the S&P 500, looks to be on the mend. Visa (NYSE:V)'s total U.S. payments’ volume returned to positive annual growth in June and from Jul 1-21 thanks to strong positive growth from debit and card-not-present (CNP) payment volumes, as well as improving performances from its credit card and card-present businesses.

This gives a clear indication of recovering consumer spending as coronavirus-led lockdowns are easing. The pandemic has boosted demand for contactless payments. So, Visa’s numbers could be used as a guide to understanding consumer behavior.

Some of the winning ETFs in this arena are Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RCD),Consumer Discretionary Select Sector SPDR Fund (XLY) and First Trust Consumer Discretionary AlphaDEX Fund (FXD) (read: Can the Best Sector & Its ETFs of July Thrive in August Too?).

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