Wall Street's Best 100 Days Since 1933: ETF Winners

Last week witnessed the 100th trading day since the stock market’s pandemic low on Mar 23.The S&P 500 logged a record close of 3,386.15 on Feb 19, then dropped by 33.9% to its Mar 23 close of 2,237.40, as coronavirus-induced lockdown stalled the global economy. During that stretch, the S&P 500 broke its longest bull run and entered the bear market.

However, the S&P 500 is now about 50% above its Mar 23 close. This marks the U.S. stock-market benchmark’s biggest 100-trading-day ascent since the period ending Aug 18, 1933, according to Dow Jones Market Data, as quoted on a MarketWatch article.

The Dow Jones Industrial Average had alsopeaked on Feb 12 and subsequently slipped into the bear market. It also ended more than 50% above its Mar 23 low of 18,591.93, marking a 90-year best achievement.

What Led to the Rally?

Investors should note that after diving into the bear market in March, Wall Street made a strong comeback in the past four months on unprecedented stimulus both from the Fed and the government.

While the Fed cut rates to zero, launched an unlimited QE, started buying investment-grade and some specific kind of high-yield corporate bonds, the U.S. government has pursued the CARES Act. Most recently, the Trump administration also announced a stimulus executive order upon the expiration of the previous stimulus act.

The reopening of global economies has resulted in an uptick in activities, leading to some upbeat economic data points in recent weeks. This shows that there is considerable pent-up demand in the economy.

On the virus front, fears of a second wave are subsiding. Virus-related hospitalizations in Texas dropped to the lowest level on Aug 12 since early July and hospitalizations in California exhibited a downtrend, with Governor Gavin Newsom suggesting that the state is “turning the corner” on the pandemic, as quoted on Yahoo Finance.

Among other positive developments, President Trump announced that the U.S. government will buy 100 million doses of Moderna’s coronavirus vaccine. Apart from this, some promising coronavirus vaccine candidates from companies like Pfizer, Astrazeneca and Johnson & Johnson are in the trial stage.

ETF Winners

Against this backdrop, below we highlight a few ETFs that topped in the best 100 days period.

First Trust Nasdaq Clean Edge Green Energy ETF (QCLN) – Up 127.5%

Growing consumer electric vehicle adoption as evident from the success of Tesla (TSLA), an increase in charging stations by U.S. states and increased solar-storage installations have acted as a tailwind for the U.S. clean energy sector over the past few quarters. The space is also set to benefit from the increasing deployment of clean energy in Europe and China.

UBS ETRACS CMCI Silver Total Return ETN USV – Up 111.7%

Silver has been on a stellar ride with prices climbing to the highest level in nearly seven years. An increase in investment demand, pickup in industrial activity due to factory reopening after lockdowns and investors’ appetite for alternatives to the safe-haven asset gold (which is pretty pricey at the current level) led to the rally.

iShares U.S. Home Construction ETF ITB – Up 125%

After being stalled by the coronavirus pandemic, the housing market has been on fire thanks to the twin tailwinds of tumbling mortgage rates and higher demand for new homes. Notably, the S&P Homebuilders Select Industry Index reached a record high for the first time in 15 years, having gained more than 13% this year and more than doubling from the low it reached in late March (read: ETFs to Tap as Homebuilder Index Hits High in 15 Years).

Invesco DWA Consumer Cyclicals Momentum ETF PEZ – Up 105.5%

Despite the pandemic, the consumer sector remains hot. The Present Situation Index of consumer confidence, which gauges consumer views on current business and labor market conditions, rose to 94.2 in July from 86.7 in the previous month. Retail sales are also returning to the pre-COVID-19 levels. This underscores pent-up demand in the economy. Cheap oil, government support and low rates are driving the sector.

SPDR SP Oil Gas Equipment Services ET FXES – Up 83.1%

This energy segment has been on a roller-coaster ride. After crashing in mid-April, oil prices recovered in May on an improved demand outlook based on the reopening of economies. In fact, WTI crude oil spiked 88% in May, marking its best monthly performance since 1983, according to data from Bloomberg. Since then, oil prices and the related sector ETFs remained more-or-less stable. Most recently, the EIA boosted its 2020 West Texas Intermediate crude price forecast to $38.50 a barrel, up 2.5% from the July forecast.

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iShares U.S. Home Construction ETF (ITB): ETF Research Reports
SPDR SP Oil Gas Equipment Services ETF (XES): ETF Research Reports
First Trust NASDAQ Clean Edge Green Energy ETF (QCLN): ETF Research Reports
Invesco DWA Consumer Cyclicals Momentum ETF (PEZ): ETF Research Reports
UBS ETRACS CMCI Silver Total Return ETN (USV): ETF Research Reports
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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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