Amid resurging COVID-19 infections and fading hopes of additional stimulus, Wall Street managed to hold on to gains last week. The Dow Jones and the S&P 500 rose 0.1% and 0.2%, respectively, while the Nasdaq Composite Index advanced 0.8% (read:
Pandemic Surges, Stimulus Fades: ETF Strategies to Follow
).
The gains are driven partly by better-than-expected retail sales in September and solid consumer data. Retail sales climbed 1.9% in September, marking the fastest pace in three months, buoyed by higher demand for goods that complement life at home, including furniture and electronics. Meanwhile, consumer sentiment hit the
pandemic high
in early October with the University of Michigan consumer sentiment index rising to 81.2 from 80.4 in September.
Additionally, news from Pfizer
PFE
that it would apply for emergency-use authorization in the United States for its vaccine in late November if trials are successful also lifted investors sentiment to end the week.
Against such a backdrop, ETFs overall gathered about $18.5 billion capital last week, bringing year-to-date inflows of $352.6 billion, ahead of the $211.7 billion seen at this same time a year ago. U.S. equity ETFs led the way higher last week with $9.5 billion inflows, closely followed by $4.5 billion in U.S. fixed income ETFs and $3.4 billion in international equity ETFs, per
etf.com
.
U.S. Equity Shines
Invesco QQQ
QQQ
was the most-loved ETF with massive inflows of $5.2 billion last week, followed by $1.6 billion in
First Trust Capital Strength ETF
FTCS
. QQQ, having a Zacks ETF Rank #1 (Strong Buy), provides exposure to the largest domestic and international non-financial companies listed on the Nasdaq. FTCS offers exposure to well-capitalized companies with strong market positions based on strong balance sheets, a high degree of liquidity, ability to generate earnings growth, and record financial strength and profit growth. This ETF has a Zacks ETF Rank #3 (Hold).
The resurgence in technology stocks reignited investors’ interest in the Nasdaq ETF while the market gyrations fueled strength in FTCS.
Vanguard Total Stock Market ETF
VTI
pulled in $1.4 billion in capital while
iShares Russell 2000 ETF
IWM
attracted $795 million in its asset base last week. VTI provides diversified exposure across all market caps as well as growth and value styles, while IWM measures the small-cap segment of the broad U.S. market. The duo has a Zacks ETF Rank #3 (read:
Small-Cap ETFs Outperforming Bigger Peers: Here’s Why
).
Online Retail Rocks
Though
ProShares Online Retail ETF
ONLN
did not make it to the top 10 inflows list due to relatively modest asset base, its assets under management jumped 69% over the past week – the most of any ETF with at least $200 million in AUM. A flare up in coronavirus cases has again compelled people to stay indoors, which in turn boosted demand for e-commerce. ONLN focuses on global retailers that derive significant revenues from online sales (read:
Online Retail ETF Hits New 52-Week High
).
Biotech & Bank Flops
The appeal for biotech ETFs, which were on high demand due to the development of a coronavirus vaccine or treatment, was diminished. This is especially as Johnson and Johnson
JNJ
and Eli Lilly
LLY
halted their trials for the novel disease vaccine over safety concerns with no sign of a vaccine anytime soon. As such,
SPDR S&P Biotech ETF
XBI
was the major loser, losing around $304 million in its asset base. It has a Zacks ETF Rank #2 (Buy).
In the absence of any further stimulus, yields declined pushing banking ETFs lower.
SPDR S&P Regional Banking ETF
KRE
saw outflows of $243 million and has a Zacks ETF Rank #3.
Foreign Equity and Bonds Mixed
While
Vanguard Total International Stock ETF
VXUS
pulled in more than $1 billion in capital,
iShares MSCI EAFE ETF
EFA
dominates the redemption list of last week with outflows of $1.1 billion. In the high-yield bond market,
iShares iBoxx USD High Yield Corporate Bond ETF
HYG
gathered $693 million while
SPDR Bloomberg Barclays High Yield Bond ETF
JNK
saw outflows of $590 million (read:
Fed’s Support Boosts Inflows in Bond ETFs: 5 Top Picks
).
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