ETFs
S&P 500 Surpasses 5,600 Points: ETFs in the Spotlight
On July 10, 2024, U.S. stocks hit new all-time highs on the back of hawkish remarks from Federal Reserve Chairman Jerome Powell and a rebound in technology stocks. The S&P 500 rose 1%, hitting its 37th record closing high this year, surpassing the 5,600 mark for the first time. Both the S&P 500 and the Nasdaq advanced for the seventh consecutive session.
Tech giants lead the race
Major technology stocks, including NVIDIA NVDA, Apple AAPL, Microsoft MSFT, and Google (GOOG, GOOGL) has propelled the market higher. Investors should note that according to the Earnings Trend report released on July 3, 2024, the Magnificent Seven companies’ second-quarter earnings are expected to increase 25.5% year-over-year on revenues up 13.2%. Excluding the Magnificent Seven, second-quarter earnings growth for the rest of the S&P 500 will decline from 8.6% to 5%.
Other sectors on the road to recovery
Nonetheless, energy sector earnings growth is on track to turn positive in the second quarter, after remaining in negative territory for the previous four quarters. Medical (+19.0%), energy (+10.9%), consumer discretionary (+12.5%) and financials (+9.0%) are the main non-tech sectors that gained momentum.
A rate cut in sight?
Investor sentiment was further bolstered by Powell’s testimony before Congress, which hinted at a possible interest rate cut. Powell highlighted slowing inflation and a slight slowdown in the labor market. Both factors could serve as tailwinds for a potential rate cut in September.
What does the year-end election have in store for the S&P 500?
The 2024 U.S. presidential election is seen as a likely source of uncertainty for the stock market. However, presidential election years have a long history of success for the S&P 500. Over the past 70 years of the S&P 500, election years have had the second-best performance of any four presidential terms, according to an article published on optuma.com.
Ryan Detrick, chief market strategist at the Carson Group, noted that historically, the S&P 500 has performed better under a Democratic president, averaging an 11.5% gain, compared to 7.1% under a Republican president, as cited on Yahoo Finance.
Low Upside Potential for S&P 500 ETFs in the Second Half?
The S&P 500 index ended the first half at 5,460.48, while many investment firms such as Goldman Sachs (quoted by Reuters) and Citigroup (quoted by investing.com) had forecast that the stock index would reach 5,600 this year, a level that has already been reached.
However, Evercore ISI raised its target for the S&P 500 to 6,000. Many analysts believe the market is broadening. While growth stocks like mega-cap tech players led performance, cyclical and defensive stocks also tried to catch up.
The story continues
Therefore, keep a close eye on ETFs like Vanguard S&P 500 Exchange Traded Fund VOO, iShares Core S&P 500 Exchange Traded Fund IVV, SPDR S&P 500 Exchange Traded Fund Spy andInvesco S&P 500 Equal Weight ETF RSP.
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Alphabet Inc. (GOOG): Free Stock Analysis Report
Apple Inc. (AAPL): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
Alphabet Inc. (GOOGL): Free Stock Analysis Report
Vanguard S&P 500 ETF (VOO): ETF Research Reports
Invesco S&P 500 Equal Weight ETF (RSP): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports