5 Sector ETFs at the Forefront of the Market Rally Last Week

Wall Street wrapped up the best week of 2023 to start November. The Dow Jones Industrial Average and the S&P 500 gained about 5% and 6%, respectively, last week, while the tech-heavy Nasdaq Composite Index outperformed, rising more than 6.6%. The rally was driven by increased investor confidence, buoyed by solid corporate earnings and signals that the Federal Reserve's aggressive interest rate hiking campaign might be nearing an end.

As the gains have been broad-based, we have highlighted five ETFs each from different sectors that gained in double digits last week. These are ARK Innovation ETF ARKK, ARK Genomic Revolution ETF (ARKG), iShares U.S. Home Construction ETF ITB, ETFMG Alternative Harvest ETF MJ and iShares U.S. Regional Banks ETF IAT.

Last week, the Fed voted to hold interest rates at their highest range in 22 years at the conclusion of its latest policy meeting and investors bet that the central bank may be done hiking. The latest soft monthly job report bolstered the idea that the Fed is done with rate hikes. Federal Reserve Chair Jerome Powell indicated that some softening in the labor market would likely be necessary to sustain the inflationary downturn (read: Growth ETFs to Shine as Fed Hints at End of Rate Hike Era).  

The world’s largest economy added lower-than-expected 150,000 jobs in October while the unemployment rate picked up to its highest level since January 2022 at 3.9%. This has pushed Treasury yields down, driving up the equities. Better-than-expected earnings added to the strength. With more than 60% of the third-quarter results already out, earnings are poised to grow despite the significant energy sector drag, which follows three back-to-back quarters of declines.

Total earnings for the 311 S&P 500 members that have reported results so far are up 2.3% from the same period last year on 2% higher revenues, with 80.7% beating EPS estimates and 61.7% beating revenue estimates. Earnings growth represents a notable improvement when compared to the recent previous quarters. Still, the revenue growth pace marks a clear decelerating trend.

ETFs in Focus

We have profiled the abovementioned ETFs in detail below:

ARK Innovation ETF (ARKK) – Up 18.6%

ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to the areas of DNA Technologies and Genomic Revolution, Automation, Robotics, and Energy Storage, Artificial Intelligence, Next Generation Internet, and Fintech Innovation. In total, the fund holds 31 securities in its basket, with some concentration on the top three firms.

ARK Innovation ETF has gathered $6.1 billion in its asset base and charges 75 bps in fees per year from investors.

ARK Genomic Revolution ETF (ARKG) – Up 17.1%

ARK Genomic Revolution ETF is an actively managed fund focused on companies that are likely to benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments, and advancements in genomics into their business.

With AUM of $1.4 billion, ARK Genomic Revolution ETF holds 39 stocks in its basket and has 0.75% in expense ratio.

iShares U.S. Home Construction ETF (ITB) – Up 13.1%

iShares U.S. Home Construction ETF provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index (read: Homebuilder ETFs Tumble: What Lies Ahead?).

With an AUM of $1.7 billion, it holds a basket of 46 stocks, with double-digit concentration on the top two firms. iShares U.S. Home Construction ETF charges 40 bps in annual fees and has a Zacks ETF Rank #3 (Hold).

ETFMG Alternative Harvest ETF (MJ) – Up 13%

ETFMG Alternative Harvest ETF is the first ETF focusing on the global cannabis/marijuana industry. It tracks the Prime Alternative Harvest Index, designed to measure the performance of companies within the cannabis ecosystem, benefiting from global medicinal and recreational cannabis legalization initiatives. ETFMG Alternative Harvest ETF holds 28 securities in its basket with a moderate concentration across top firms.

ETFMG Alternative Harvest ETF has AUM of $193.1 million and charges 75 bps in annual fees (read: Cannabis ETFs Surge on Legalization Hopes: More Run Ahead?).

iShares U.S. Regional Banks ETF (IAT) – Up 12.4%

iShares U.S. Regional Banks ETF offers exposure to 35 small and mid-cap regional bank stocks by tracking the Dow Jones U.S. Select Regional Banks Index. It is largely concentrated on the top three firms with a double-digit allocation each.

iShares U.S. Regional Banks ETF has amassed $564.1 million in its asset base and charges 40 bps in annual fees. It currently has a Zacks Rank #4 (sell).

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iShares U.S. Home Construction ETF (ITB): ETF Research Reports

ARK Innovation ETF (ARKK): ETF Research Reports

iShares U.S. Regional Banks ETF (IAT): ETF Research Reports

ARK Genomic Revolution ETF (ARKG): ETF Research Reports

ETFMG Alternative Harvest ETF (MJ): ETF Research Reports

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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