
[ad_1]
Despite some tough economic challenges, the broad market index, the S&P 500, has performed well, adding 13.97% year-to-date (through August 31). According to Morgan Stanley analyst Andrew Slimman, the market rally is far from over and the S&P 500 will see gains by the “Magnificent Seven” group of companies. Apple (APPL), Microsoft (MSFT), Google owner Alphabet (Google), Amazon (amzn), NVIDIA (NVDA), Tesla (TSLA) and meta (meta), as cited on Yahoo Finance, are all of the index’s top 10 allocations.
For investors optimistic about market performance, ETFs that mirror the S&P 500 index can be smart ways to capture potential gains. Additionally, it is difficult to beat the S&P 500 over the long term and investing in broad market ETFs can help reduce the effects of market volatility. SPDR S&P 500 ETF detective,iShares Core S&P 500 ETF IVIV, Vanguard 500 Index Fund Wu and SPDR Portfolio S&P 500 ETF SPLG can be considered.
reason behind optimism
According to Andrew Slimman, as quoted on Yahoo Finance, while the “Magnificent Seven” companies have had a great year so far, most of them are still valued below where they were at the end of 2021, with only The exception is Nvidia, as he told CNBC’s Street Signs. He also expects the share price of these companies to rise sharply in the fourth quarter of 2023.
The Morgan Stanley analyst expects the benchmark index to reach a level close to 5,000 by the end of the year.
Is this optimism supported?
According to a Reuters article, in late July, Citigroup raised its outlook for the market index, forecasting that it would reach the 5,000 mark in 2024, citing a high probability of a “soft landing” of the US economy. Granted, there is a motivating factor behind it. positive outlook.
Despite having different time horizons and price ranges, UBS equity analysts maintain an optimistic outlook for the benchmark indices. According to ForexLive, analysts at UBS Equity have increased their price forecast for the S&P 500 index in June 2024 to 4,700 points. They base this on their belief that the company’s earnings will grow rapidly in 2024.
Additionally, analysts at UBS suggest that the index could potentially reach the 5,200 mark if artificial intelligence (AI) has a truly significant impact, economic growth remains strong and inflation declines rapidly.
AI rally to boost index
AI has made a lasting impact in various sectors of society. It has spread its influence and left its mark on almost every industry. Dan Ives of Wedbush Securities estimates that an additional trillion dollars will be spent in the AI sector over the next 10 years. As reported on CNBC, analysts estimate a $12 billion opportunity in the AI sector, indicating the AI boom isn’t over yet (Read: Nvidia earnings show AI boom is here to stay : ETFs in Focus).
The S&P 500 Index allocates approximately 28.2% of its assets to the information technology sector. This significant allocation positions the index to potentially benefit from growing enthusiasm and developments around AI, which supports optimism around price targets for the benchmark index.
what lies ahead?
The bullish outlook for the benchmark index faces challenges, including the Fed’s hawkish stance and the ongoing issue of sticky inflation levels. However, there is some respite from the signs of low inflation.
According to Reuters, it is widely expected that the US central bank will keep interest rates steady during its September meeting, but there remains some uncertainty over whether they will decide to pause or hold rates in November, according to CME Group’s Fedwatch tool. Select the option to increase. Eric Rosengren, who was president of the Boston Fed from 2007 to 2021, believes the Fed may decide to hold off on raising interest rates if the slowdown in the labor market and economic growth continues, according to Reuters has quoted.
The positive outlook for benchmark indices is justified after JPMorgan and Bank of America cut their bearish projections for 2023 and forecast that the US economy will expand at a strong and steady rate of growth.
ETFs in Focus
SPDR S&P 500 ETF (SPY)
The SPDR S&P 500 ETF has an annual fee of 0.09 and has accumulated an asset base of $406.99 billion. Being one of the most widely known ETFs, SPY has gained 18.83% year to date (till 31st August).
The SPDR S&P 500 ETF’s major allocation is to Apple (7.36%), Microsoft (6.45%) and Amazon (3.26%). Its Zacks ETF Rank is #3 (Hold).
iShares Core S&P 500 ETF (IVV)
The iShares Core S&P 500 ETF has a low annual fee of 0.03% and has accumulated an asset base of $348.17 billion. IVV has gained 18.90% so far (till 31 August).
The iShares Core S&P 500 ETF’s major allocation is to Apple (7.33%), Microsoft (6.46%) and Nvidia (3.22%). Its Zacks ETF Rank is #2 (Buy).
Vanguard 500 Index Fund (woo)
The Vanguard 500 Index Fund has a low annual fee of 0.03% and has gathered an asset base of $331.04 billion. VOO has gained 18.88% year to date (till 31st August).
The Vanguard 500 Index Fund’s major allocation is to Apple (7.53%), Microsoft (6.47%) and Amazon (3.09%). Its Zacks ETF Rank is #2 (Buy).
SPDR Portfolio S&P 500 ETF (SPLG)
The SPDR Portfolio S&P 500 ETF has a low annual fee of 0.02% and has gathered an asset base of $20.09 billion. SPLG has achieved a growth of 18.90% till date (as on 31st August).
The SPDR Portfolio S&P 500 ETF’s major allocation is to Apple (7.33%), Microsoft (6.43%) and Amazon (3.25%). Its Zacks ETF Rank is #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for Next 30 Days. Click to receive this free report
SPDR S&P 500 ETF (SPY): ETF Research Report
Vanguard S&P 500 ETF (VOO): ETF Research Report
iShares Core S&P 500 ETF (IVV): ETF Research Report
SPDR Portfolio S&P 500 ETF (SPLG): ETF Research Report
Click here to read this article on Zacks.com.
Jax Investment Research
Source: finance.yahoo.com
[ad_2]