5 ETFs Most Loved By Investors Last Week

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The U.S. stock market witnessed volatility last week with the S&P 500 and the Dow Jones hitting new highs and then retreating. The S&P 500 touched new highs, just below the 4,000 level while the Dow Jones topped 33,000 early last week.

Faster vaccine deployment, continued progress in more vaccines, and the new $1.9 trillion stimulus passed by President Joe Biden continued to bolster investors’ confidence. Additionally, the Fed in its latest meeting maintained interest rate near zero with no interest rate hikes through 2023. The central bank projects a rapid jump in U.S. economic growth and inflation this year as the COVID-19 crisis winds down. This combination of factors will continue to push the stocks higher.

However, rising yields took a toll on high-growth stocks, especially tech as the sector relies on easy borrowing for superior growth and its value depends heavily on future earnings. A rise in long-term yields lowers the present value of companies’ future earnings. Additionally, the Fed declined to extend a temporary capital buffer relief put in place to ease the pandemic-led stress in the funding market. The rule is expiring at the end of the month and has relaxed the supplementary leverage ratio for banks amid the pandemic. The move has pushed down the bank stocks lower.

In such a scenario, investors continue to rotate to small-cap and value stocks while dumping the high-growth and high-beta sectors. As a result, the Dow Jones and S&P 500 broke their two-week winning streak while the tech-heavy Nasdaq Composite Index recorded it fourth negative week in five. All the three indices lost no more than 0.8% last week.

Overall, ETFs gathered about $71 billion capital last week, bringing in year-to-date inflows of $252.5 billion, more than triple the $70.7 billion seen in the year-ago period. U.S. equity ETFs led the way higher last week with $60.3 billion inflows, closely followed by $6.7 billion in international equity ETFs, per etf.com.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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