August has left investors elated after an impressive Wall Street rally. The S&P 500 and Nasdaq Composite indices rose 2.9% and 4%, respectively, in the month. The blue-chip Dow Jones Industrial Average has also gained 1.2% in the same period. In fact, the S&P 500 index witnessed its seventh consecutive month of gains. The S&P 500 Information Technology index has also returned 3.4% in the past month.
Notably, the Fed doesn’t look to hike interest rates in the near term. Also, Fed Chairman Jerome Powell seems to have prepared the market for tapering its $120 billion in monthly bond purchases this year. The second-quarter earnings season saw better-than-expected results, stimulating the rally in stock markets. According to a CNBC article, the S&P 500 is on track to witness the largest increase since fourth-quarter 2009 by recording an earnings growth rate of 95.4%.
The United States is witnessing a considerable rise in the number of COVID-19 cases. Going by Johns Hopkins University data, the United States is witnessing an average of 160,000 new COVID-19 cases a day, per a CNN report. Considering the current situation, Dr. Rochelle Walensky, the director of the US Centers for Disease Control and Prevention (CDC), has urged unvaccinated Americans to avoid travel during the Labor Day holiday weekend, according to a CNN report.
As the U.S. economy was reopening, an increasing number of American shoppers were seen to be visiting stores for some retail therapy. However, with the surging delta variant cases, shoppers are expected to again resort to online shopping.
Certain other ‘new normal’ trends have also emerged amid the health crisis like work from home, increasing digital payments, growing video streaming as well as soaring video game sales. The pandemic is also a boon for the e-commerce industry as people continue staying indoors and shopping online for all essentials, especially food items.
Further, the semiconductor space has been gaining from expanding digitization and growing dependency on the Internet owing to some new normal trends like online shopping, work from home, digital payments, digitization of healthcare, rising demand for video gaming and many more. In fact, growing adoption of cloud computing and the ongoing infusion of AI, machine learning and IoT are expected to keep the sector brewing with opportunities in 2021.
Technology has played a major role in the ongoing health crisis. Telemedicine and Digital Health are receiving significant importance. In the present era, data management and storage have become an integral aspect of healthcare. Moreover, the pandemic led to an increase in doctors preferring online consultations. Thus, with the technological advancements in the healthcare sector and the rising adoption of healthcare IT solutions as well as advantages of cloud usage healthcare, the cloud computing market is on a growth trajectory.
The work-from-home model has bumped up sales of PCs, laptops and other kind of computer peripherals as well. Going by IDC’s Worldwide Quarterly Personal Computing Device Tracker, the global shipment of PCs that include laptops and tablets, desktops and notebooks, reached 83.6 million units in the second quarter, rising 13.2% on a year-over-year basis.
Technology ETFs to Grab
All the factors discussed above highlight the instrumental role that technology plays amid the ongoing COVID-19 uncertainty in aiding people to maintain safe-distancing norms. Thus, investors could consider the following ETFs:
Vanguard Information Technology ETF VGT
The fund seeks to track the performance of the MSCI US Investable Market Information Technology 25/50 Index. It has AUM of $51.06 billion. It charges investors 10 basis points (bps) in annual fees. The fund currently sports a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook (read: ETFs to Buy as Microsoft at Record High on Office 365 Price Hike).
The Technology Select Sector SPDR Fund XLK
The fund seeks to provide investment results that before expenses correspond generally with the price and yield performance of the Technology Select Sector Index. It has AUM of $46.03 billion. It charges investors 12 bps in annual fees. The fund presently flaunts a Zacks ETF Rank of 2, with a Medium-risk outlook (read: Follow Buffett With These Inflation-Friendly ETF Strategies).
iShares U.S. Technology ETF IYW
The fund seeks to provide investment results that before expenses correspond generally with the price and yield performance of the Dow Jones U.S. Technology Capped Index. It has AUM of $8.89 billion. It charges investors 43 bps in annual fees as stated in the prospectus. The fund currently sports a Zacks ETF Rank #2, with a Medium-risk outlook (read: 5 Tech ETFs Outperforming the Market This Year).
First Trust NASDAQ-100-Technology Sector Index Fund QTEC
The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield of the NASDAQ-100 Technology Sector Index. It has AUM of $3.89 billion. It charges investors 57 bps in annual fees. The fund also flaunts a Zacks ETF Rank #2 at present, with a High-risk outlook.
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Technology Select Sector SPDR ETF (XLK): ETF Research Reports
iShares U.S. Technology ETF (IYW): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
First Trust NASDAQ100Technology Sector ETF (QTEC): ETF Research Reports
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