5 Cyclical Sector ETFs Hitting New Highs

After months of dominance by the tech sector, the trend seems to be reversing with cyclical sectors taking charge this month. This is especially true as the latest rounds of data signals that the economy is stabilizing amid the lingering coronavirus crisis, providing enough impetus to economic-sensitive sectors.

This is especially true as retail sales bounced back to their pre-pandemic level in just a few months after slumping to a seven-year low in April. In July, the unemployment rate dropped to 10.2%, below June's 11.1% mark while U.S. manufacturing activity expanded at the fastest pace in 15 months. Meanwhile, confidence among homebuilders soared to the highest level ever in August buoyed by record-low interest rates, which spurred buying.

Investors should note that the cyclical sectors are tied to economic activities and when growth improves, these perform well. Additionally, the stocks in these sectors are attractively valued at the current levels as they were beaten down badly by the coronavirus-led market sell-off. Further, trillions of dollars injected into the economy and hopes of a potential coronavirus vaccine will continue to fuel the rally.

That said, we have presented five ETFs that scaled new highs in the latest trading session and belong to cyclical sectors. The solid trend is likely to continue if the current fundamentals prevail.

Invesco DWA Industrials Momentum ETF (PRN - Free Report) – 52-Week High Price: $76.63

This fund provides exposure to 41 companies by tracking the Dorsey Wright Industrials Technical Leaders Index. It is well balanced across each security with none accounting for more than 4.1% share in the basket. In terms of industrial exposure, aerospace and defense, electrical equipment, IT services, machinery, and building products make up the top five. The fund has amassed $64.4 million in its asset base and charges 60 basis points in annual fees. It trades in average daily volume of 4,000 shares and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook

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