Wall Street has impressed investors with a good start to June. Notably, the S&P 500 Index is standing at less than 0.2% from its all-time high hit in May. Going on, the first trading week of June saw decent performances as the Dow Jones Industrial Average and the S&P 500 rose 0.7% and 0.6%, respectively. These indices witnessed their second consecutive positive week (per a CNBC article). Seeing its third straight positive week, the tech-heavy Nasdaq Composite index also rose about 0.5% last week.
Investors seem to be optimistic about the accelerated coronavirus vaccine rollout, solid fiscal stimulus support and reopening of the U.S. economy, which may lead to faster U.S. economic recovery from the pandemic-led economic slowdown. According to data from Johns Hopkins University, the daily average of new cases declined to roughly 17,248, as of May 31 (per a CNN report). The decline in the number of coronavirus cases has increased optimism among market participants toward faster recovering and reopening of the U.S. economy.
The United States is strongly controlling the coronavirus outbreak with accelerated coronavirus vaccine distribution. According to the Centers for Disease Control and Prevention (CDC) data, more than half of the U.S. population has been administered at least one dose of a COVID-19 vaccination, per a CNBC article. A CNN report also stated that 12 states have touched President Joe Biden’s target to vaccinate 70% of adults, with at least one dose of coronavirus vaccine by Jul 4, per the CDC.
Going on, the latest public health guidelines issued by the CDC have relaxed restrictions on wearing masks at indoor and public gatherings. According to the new recommendations, completely vaccinated people do not need to wear masks or stay six feet away from others at indoor or outdoor gatherings, per a CNBC article.
Furthermore, there are certain new economic data releases which are pointing toward economic recovery. Notably, the recently-released robust job and manufacturing data majorly boosted market participants' confidence. The Department of Labor reported that the U.S. economy added 559,000 jobs in May compared with an upwardly revised 278,000 payrolls added in April, as mentioned in a CNBC article. However, the consensus estimate stood at 671,000, according to economists surveyed by Dow Jones, per a CNBC article. The unemployment rate slid to 5.8% last month from 6.1% in April. The number also compared favorably with analysts’ estimate of 5.9%, according to a CNBC article.
In this regard, John Briggs, global head of strategy at NatWest Markets, has commented that the latest jobs number is“goldilocks for risk,” per a CNBC article. He has also said that the metric is “not too hot to bring in the Fed and not too cold to worry about the economy,” according to the same article as mentioned above.
Strengthening optimism about U.S. economic recovery, the latest reading on the first-time claims for unemployment benefits for the week ended May 29 came in at 385,000, as mentioned in a CNBC article. It compared favorably with the Dow Jones estimate of 393,000. Moreover, the jobless claims slid below 400,000 for the first time since the early days of the coronavirus outbreak, per the same CNBC article.
Also, the latest ISM Manufacturing PMI data for the United States is painting a rosy picture for the sector. The ISM Manufacturing PMI read 61.2 in May against 60.7 in April. May’s growth was higher than analysts’ expectations of 60.7. Moreover, manufacturing activity rose for the 12th straight month.
ETFs to Ride the Wave
Investors who seek to capitalize on the strong trends should consider the following ETFs:
SPDR S&P 500 ETF Trust SPY
This fund seeks to provide investment results that before expenses correspond generally to the price and the yield performance of the S&P 500 Index. Its AUM is $359.62 billion and the total expense ratio, 0.09% (read: 5 ETFs That Saw Maximum Capital Inflows Last Week).
iShares Core S&P 500 ETF IVV
The fund seeks to track the investment results of an index composed of large-capitalization U.S. equities. Its AUM is $280.37 billion and the total expense ratio, 0.03% (read: Record Inflows to U.S. ETFs This Year: 6 Winners).
Vanguard S&P 500 ETF VOO
The fund seeks to track the performance of the S&P 500 Index. Its AUM is $226.01 billion and the total expense ratio, 0.03% (read: 5 ETFs to Buy for June).
SPDR Dow Jones Industrial Average ETF Trust DIA
The fund seeks to provide investment results that before expenses correspond generally to the price and the yield performance of the Dow Jones Industrial Average. Its AUM is $30.52 billion and the total expense ratio, 0.16% (read: ETFs in Focus as Dow Jones Turns 125 Years).
iShares Dow Jones U.S. ETF IYY
The fund seeks to track the investment results of a broad-based index composed of U.S. equities. Its AUM is $1.63 billion and the total expense ratio, 0.20%.
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SPDR-SP 500 TR (SPY): ETF Research Reports
SPDR-DJ IND AVG (DIA): ETF Research Reports
ISHARS-DJ US IF (IYY): ETF Research Reports
ISHARS-SP500 (IVV): ETF Research Reports
VANGD-SP5 ETF (VOO): ETF Research Reports
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