Wall Street has been navigating a rollercoaster of financial fluctuations recently. The looming specter of a recession keeps investors perched on the edge of their seats, while speculation around Federal Reserve rate cuts in September injects a dose of optimism into the stock market. Amidst this turbulent backdrop, the second-quarter earnings season presented a snapshot of stability in corporate profits. However, concerns have surfaced concerning the future outlook, as estimates for the current period have displayed a palpable weakening compared to the preceding two periods.
According to statistics, total second-quarter earnings for 473 S&P 500 members, representing an impressive 94.6% of the index’s total membership, have surged by 8.0% from the same period last year alongside a 5.0% rise in revenues. Encouragingly, 79.7% of these companies have surpassed EPS estimates, with 59.8% exceeding revenue estimates. Although the revenue beat percentage of 59.8% stands near the lower end of historical trends for this cohort of 473 index members over the past 20 quarters, all other performance parameters exhibit improvements when juxtaposed against recent periods.
Despite market volatility, most equity Exchange-Traded Funds (ETFs) have delivered notable performances, yielding commendable returns over the last month. Here, we spotlight four ETFs from diverse sectors that have navigated these turbulent waters with aplomb, leveraging strong earnings as a bullish tailwind. Accompanied by insightful charts depicting their performances over the past month, the following ETFs stand out in the current financial landscape.
Charting the Success of iShares U.S. Medical Devices ETF (IHI)
With a stellar 6.7% surge over the past month, the iShares U.S. Medical Devices ETF stands tall. Noteworthy figures reveal that total earnings within the healthcare sector’s market capitalization have escalated by an impressive 19.1%, supported by an 8.3% uptick in revenues. Driven by a robust performance from 86% of companies that exceeded earnings expectations and 75.4% that surpassed top-line estimates, the healthcare sector emerges as a primary contributor to the S&P 500’s earnings growth.
The non-cyclical nature of the sector provided a crucial buffer for the ETF amidst market volatilities, further propelling its ascent. Backed by a Zacks ETF Rank #2 (Buy) with a Medium risk outlook, the iShares U.S. Medical Devices ETF shines as a beacon of stability in tumultuous times.
