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The Zacks Analyst Blog Highlights XLF, XLI, IYM, XLY and JETS
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For Immediate Release
Chicago, IL – October 6, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. ETF’s recently featured in the blog include: Financial Select Sector SPDR ETF (XLF - Free Report) , Industrial Select Sector SPDR ETF (XLI - Free Report) , iShares U.S. Basic Materials ETF (IYM - Free Report) , Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) and U.S. Global Jets ETF (JETS - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
5 Top-Ranked Sector ETFs to Buy for Q4
The S&P 500, the Nasdaq and the Dow Jones – all entered the bear market this year, having lost about 23.5%, 30.8% and 19.8% so far this year (as of Sep 27, 2022). But the fourth quarter may not see such turbulent trading as it includes the all-important holiday season. Over the past decade, the fourth quarter of the year has actually been the best for the stock market, with the Dow, S&P 500 and Nasdaq up at least 4% on average, per a CNBC article.
The S&P 500 had traded positively 80% of the time, according to a CNBC analysis of Kensho, a market data analysis platform. The Dow Jones Industrial Average had added 5% in fourth quarters over the past 10 years, trading positive 80% of the time.
Agreed, inflationary pressure, rising rate worries and recessionary fears are in fine fettle. But those threats are currently priced in the valuation. Against this backdrop, below we highlight a few sector ETFs that could be great picks for Q4.
The best S&P 500 sectors over the past decade in the fourth quarter have been the S&P financial sector, industrial sector and materials sector, all posting average returns above 6% and trading positive 90% of the time. Consumer discretionary is another winner, per the above-said CNBC article.
Though financial stocks have been weighing on the broader market lately due to flattening of the yield curve, long-term yields may jump in the fourth quarter due to the holiday shopping season and the broad-based risk-on trade sentiments. If this happens and yield curve steepens, the cheaper valuation of the financial sector will give it a leeway to outperform in Q4.
Manufacturing activities are decent in the United States. The industry survey for ISM Manufacturing PMI revealed that "business conditions are good, and demand is strong" for the industrials sector. Employment in manufacturing sector has also been decent (read: 4 Sector ETFs to Bet Big on Decent U.S. Manufacturing Data).
Upbeat activities in the infrastructure and industrials sectors made demand for materials high. Orders of Chemical Products remained strong. Earnings season too was upbeat. Companies of the sector delivered a blended beat ratio of 70.6%. As many as 82.4% companies beat on earnings while 70.6% outperformed on revenues. This should make IYM a winning proposition (read: Looking for Earnings Beat? Play 6 Sector ETFs).
The late October-December period embraces the key holiday season, which puts the spotlight on the performance of retailers. As loads of sales-boosting events — Halloween, Thanksgiving, Cyber Monday, Black Friday and Christmas — fall in this quartile, the sector generally sees a sales boost. Mastercard SpendingPulse says U.S. retail sales are expected to rise non-inflation adjusted 7.1% year over year (up 8.5% versus 2021) for the holiday season, excluding autos and gas. As a result, the consumer discretionary sector has every chance to outperform in Q4.
Airlines – U.S. Global Jets ETF – Zacks Rank #2
A 'huge surge in travel' this holiday season is expected this holiday season, per economists, as quoted on Yahoo Finance. In 2020 and 2021, holiday travelling was under pressure due to heightened fear of COVID-19. Thanksgiving and Christmas are normally two of the most traveled holidays in the fourth quarter.
According to Hopper's 2022 Holiday Travel Outlook released in September, the average price of a domestic plane ticket is $350 for Thanksgiving travel and $463 for Christmas travel. These prices are 22% higher than in 2019 and 43% more than in 2021. This makes JETS a compelling buy.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights XLF, XLI, IYM, XLY and JETS
For Immediate Release
Chicago, IL – October 6, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. ETF’s recently featured in the blog include: Financial Select Sector SPDR ETF (XLF - Free Report) , Industrial Select Sector SPDR ETF (XLI - Free Report) , iShares U.S. Basic Materials ETF (IYM - Free Report) , Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) and U.S. Global Jets ETF (JETS - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
5 Top-Ranked Sector ETFs to Buy for Q4
The S&P 500, the Nasdaq and the Dow Jones – all entered the bear market this year, having lost about 23.5%, 30.8% and 19.8% so far this year (as of Sep 27, 2022). But the fourth quarter may not see such turbulent trading as it includes the all-important holiday season. Over the past decade, the fourth quarter of the year has actually been the best for the stock market, with the Dow, S&P 500 and Nasdaq up at least 4% on average, per a CNBC article.
The S&P 500 had traded positively 80% of the time, according to a CNBC analysis of Kensho, a market data analysis platform. The Dow Jones Industrial Average had added 5% in fourth quarters over the past 10 years, trading positive 80% of the time.
Agreed, inflationary pressure, rising rate worries and recessionary fears are in fine fettle. But those threats are currently priced in the valuation. Against this backdrop, below we highlight a few sector ETFs that could be great picks for Q4.
The best S&P 500 sectors over the past decade in the fourth quarter have been the S&P financial sector, industrial sector and materials sector, all posting average returns above 6% and trading positive 90% of the time. Consumer discretionary is another winner, per the above-said CNBC article.
Sector ETFs in Focus
Financials – Financial Select Sector SPDR ETF – Zacks Rank #1 (Strong Buy)
Though financial stocks have been weighing on the broader market lately due to flattening of the yield curve, long-term yields may jump in the fourth quarter due to the holiday shopping season and the broad-based risk-on trade sentiments. If this happens and yield curve steepens, the cheaper valuation of the financial sector will give it a leeway to outperform in Q4.
Industrials – Industrial Select Sector SPDR ETF – Zacks Rank #2 (Buy)
Manufacturing activities are decent in the United States. The industry survey for ISM Manufacturing PMI revealed that "business conditions are good, and demand is strong" for the industrials sector. Employment in manufacturing sector has also been decent (read: 4 Sector ETFs to Bet Big on Decent U.S. Manufacturing Data).
Materials – iShares U.S. Basic Materials ETF – Zacks Rank #1
Upbeat activities in the infrastructure and industrials sectors made demand for materials high. Orders of Chemical Products remained strong. Earnings season too was upbeat. Companies of the sector delivered a blended beat ratio of 70.6%. As many as 82.4% companies beat on earnings while 70.6% outperformed on revenues. This should make IYM a winning proposition (read: Looking for Earnings Beat? Play 6 Sector ETFs).
Consumer Discretionary – Consumer Discretionary Select Sector SPDR ETF – Zacks Rank #1
The late October-December period embraces the key holiday season, which puts the spotlight on the performance of retailers. As loads of sales-boosting events — Halloween, Thanksgiving, Cyber Monday, Black Friday and Christmas — fall in this quartile, the sector generally sees a sales boost. Mastercard SpendingPulse says U.S. retail sales are expected to rise non-inflation adjusted 7.1% year over year (up 8.5% versus 2021) for the holiday season, excluding autos and gas. As a result, the consumer discretionary sector has every chance to outperform in Q4.
Airlines – U.S. Global Jets ETF – Zacks Rank #2
A 'huge surge in travel' this holiday season is expected this holiday season, per economists, as quoted on Yahoo Finance. In 2020 and 2021, holiday travelling was under pressure due to heightened fear of COVID-19. Thanksgiving and Christmas are normally two of the most traveled holidays in the fourth quarter.
According to Hopper's 2022 Holiday Travel Outlook released in September, the average price of a domestic plane ticket is $350 for Thanksgiving travel and $463 for Christmas travel. These prices are 22% higher than in 2019 and 43% more than in 2021. This makes JETS a compelling buy.
Want key ETF info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Get it free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.