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.
Weathering the Storm: First Trust S-Network E-Commerce ETF
The First Trust S-Network E-Commerce ETF has soared by 5.7% in the past month, showcasing resilience amid turbulent market conditions. Providing exposure to companies across Content Navigation, Online Retail, Online Marketplace, and E-Commerce Infrastructure segments, this ETF carved its path in the retail sector — the second-largest contributor to the S&P 500’s earnings growth trajectory.
Bolstered by a Zacks ETF Rank #3 (Hold), the First Trust S-Network E-Commerce ETF stands as a testament to the endurance and adaptability of businesses, navigating headwinds with poise.
Amidst Uncertainty: iShares U.S. Insurance ETF (IAK)
The iShares U.S. Insurance ETF has captured a 5.4% gain over the last month, underscoring its resilience and capacity to weather economic uncertainties. Offering exposure to U.S. companies engaged in life, property and casualty, and full-line insurance, this ETF showcases robust performance.
With a Zacks ETF Rank #2 denoting its Medium risk outlook, the iShares U.S. Insurance ETF remains a stalwart amidst the financial sector’s shifting landscape, displaying remarkable fortitude in the face of market fluctuations.
Thriving in Adversity: Invesco DWA Technology Momentum ETF (PTF)
Despite the technology sector grappling with a sell-off triggered by waning enthusiasm towards Artificial Intelligence (AI), the Invesco DWA Technology Momentum ETF surged by 7.4%. Distancing itself from major tech players such as Tesla, Alphabet, Microsoft, and Amazon, PTF thrived by focusing on tech companies exemplifying relative strength (momentum).
Backed by a Zacks ETF Rank #1 (Strong Buy), the Invesco DWA Technology Momentum ETF paints a vivid picture of resilience within the technology sector. While earnings and revenue beat percentages may have dipped below historical averages, growth rates remain encouraging compared to previous periods.
Image Source: Zacks Investment Research