ETFs
ETFs will bet on bullish analyst forecasts for the S&P 500 – May 20, 2024
The S&P 500 index surpassed 5,300 points last week for the first time ever, showing strong confidence. The latest rally is driven by renewed bets on rate cuts as soon as September, after April inflation data cooled for the first time in six months. Traders now see a 68% chance that the Fed will cut rates for the first time in September, according to the CME FedWatch tool.
Lower interest rates generally lead to lower borrowing costs, helping businesses expand their businesses more easily and leading to increased profitability. This will in turn boost economic growth and boost the stock market. Renewed hopes for rate cuts make Wall Street analysts even more optimistic about the S&P 500 index (read: What is the best S&P 500 ETF to buy?).
Investors could take advantage of this opportune moment with ETFs that track the S&P 500 index. These include SPDR S&P 500 ETF Trust (Quick quote from SPYTO SPY – Free report) , iShares Core S&P 500 ETF (Quick quote IVVIVV – Free report) , Vanguard S&P 500 ETF (Quick quote VOOVOO – Free report) , SPDR Portfolio S&P 500 ETF (SPLG quick quoteSPLG – Free report) And Invesco S&P 500 Top 50 ETF (Quick quote XLGXLG – Free report) .
Bullish forecasts from analysts
Given the continued momentum in the stock market, BMO Capital Markets raised the year-end price target for the S&P 500 from 5,100 to 5,600, becoming the most optimistic analyst on Wall Street . Deutsche Bank joined the league, raising the price target from 5,100 to 5,500 for this year, citing strong corporate earnings to support stock valuations. In fact, it has the highest target among major brokerages.
One of Wall Street’s leading bears, Morgan Stanley, turned positive on the outlook for U.S. stocks by raising the S&P 500’s price target from 4,500 to 5,400. It now expects the index is rising 2% this year, a major turnaround from its forecast of a 15% fall in the benchmark by December.
Hopes for rate cuts, continued adoption of AI as well as strong earnings growth projections are expected to further boost the S&P 500 (read: Growth ETFs to Buy as Declining Inflation Fuels Rate Cut Bets).
According to a new study from Bank of America, the stock market posted a rise bullish signal, suggesting more upside to come. The S&P 500 advance-decline line, which measures the extent or participation of individual stocks in stock market gains, hit a new all-time high on May 17. The mid-cap advance-decline line also hit a new high, while the small-cap index line is poised to hit a new 52-week high. This indicates that the index is likely to reach record levels this summer.
ETFs to bet on
SPDR S&P 500 ETF Trust (SPY Quick QuoteTO SPY – Free report)
SPDR S&P 500 ETF Trust tracks the S&P 500 Index and holds 503 stocks in its basket, each representing no more than 7% of assets. The SPDR S&P 500 ETF Trust is heavily weighted toward the information technology sector, while the financial, healthcare, and consumer discretionary sectors round out the next three spots with a double-digit allocation each.
SPDR S&P 500 ETF Trust charges investors 9 basis points in annual fees and trades an average daily volume of 60 million shares. It has $525.8 billion in assets under management and a Zacks ETF Rank #2 (Buy) with a Medium Risk Outlook.
iShares Core S&P 500 ETF (IVV Quick QuoteIVV – Free report)
With $463 million in assets under management, the iShares Core S&P 500 ETF is much smaller than SPY and less liquid, trading an average daily volume of 5 million shares. It charges just 3 basis points in annual fees, which is 6 basis points less than the State Street product. The iShares Core S&P 500 ETF has a Zacks ETF Rank #1 (Strong Buy) with a Medium Risk Outlook.
Vanguard S&P 500 ETF (VOO Quick QuoteVOO – Free report)
The Vanguard S&P 500 ETF also directly tracks the S&P 500 Index and holds 504 stocks in its basket. It has amassed $448 billion in assets and charges investors 3 basis points in annual fees. The Vanguard S&P 500 ETF trades in an average daily volume of 5 million shares and has a Zacks ETF Rank #1 with a Medium Risk Outlook (read: 5 ETFs to play with booming company buyouts).
SPDR Portfolio S&P 500 ETF (SPLG Quick QuoteSPLG – Free report)
The SPDR Portfolio S&P 500 ETF tracks the S&P 500 Index and holds 503 stocks in its basket, with an expense ratio of 0.02%. It has amassed $36 billion in assets and trades a solid volume of 8 million shares per day on average. The SPDR Portfolio S&P 500 ETF has a Zacks ETF Rank #1.
Invesco S&P 500 Top 50 ETF (XLG Quick QuoteXLG – Free report)
The Invesco S&P 500 Top 50 ETF tracks the S&P 500 Top 50 ETF, which measures the market-cap-weighted performance of 50 of the largest companies in the S&P 500 Index, reflecting the performance of large-scale U.S. stocks. capitalization. The Invesco S&P 500 Top 50 ETF was able to manage assets worth $4.3 billion, but on average trades a volume of about 1.2 million shares per day. XLG charges 20 basis points in annual fees and has a Zacks ETF Rank #3 with a Medium Risk Outlook.