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Wall Street roared back after a sell-off early in the month as fears of recession eased. The S&P 500 and the Nasdaq Composite Index extended their winning streak to eight consecutive sessions, the longest in 2024. The Dow Jones Industrial Average notched its fifth straight daily gain. The surge recouped all the losses of the early August sell-off. Notably, the last week ushered in the biggest gains for the three major indexes this year.

The technology sector, which bore the biggest brunt, rebounded strongly and once again led the market over the past week. That said, we have highlighted five technology ETFs that have been leading the way higher over the past week. These are Invesco DWA Technology Momentum ETF (PTF - Free Report), Strive U.S. Semiconductor ETF (SHOC - Free Report), Invesco PHLX Semiconductor ETF (SOXQ - Free Report), VanEck Vectors Semiconductor ETF (SMH - Free Report) and ARK Genomic Revolution ETF (ARKG - Free Report).

Inside the Rebound

The latest bouts of data signal a resilient economy, rekindling investors’ confidence in the stock market. Consumer sentiment rebounded in August for the first time in five months. It held up better than expected in July, with retail sales rising 1%. Meanwhile, annual inflation growth in July slowed to its lowest level since March 2021 while the core inflation dropped to the lowest since April 2021. This indicates that inflation is easing. 

Additionally, the bets that the Fed will cut interest rates in September have been leading to risk-on trade. According to the latest CME FedWatch tool, traders have been pricing in a 72% chance the Fed will reduce rates by 0.25% at the September meeting and 28% odds of a 0.50% cut. When the Fed starts cutting rates, technology stocks will receive a boost. As the tech sector relies on borrowing for superior growth, borrowing more money for further initiatives is cheaper when interest rates are low.

The artificial intelligence (AI) boom will continue to fuel the rally in the tech sector as the expansion of AI applications holds the promise of ushering in fresh opportunities for growth within the sector and beyond.

ETFs at the Forefront

Invesco DWA Technology Momentum ETF (PTF) – Up 14.9%

Invesco DWA Technology Momentum ETF offers exposure to 36 tech companies that are showing relative strength (momentum) by tracking the Dorsey Wright Technology Technical Leaders Index. Semiconductor & Equipment takes the largest share at 38.4%, followed by software (30.4%) and diversified telecom services (10.4%). Invesco DWA Technology Momentum ETF is relatively illiquid and unpopular, with AUM of $443.7 million. It charges 60 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy).

Strive U.S. Semiconductor ETF (SHOC) – Up 12.2%

Strive U.S. Semiconductor ETF seeks broad market exposure to the U.S. semiconductor sector. It follows the Bloomberg US Listed Semiconductors Select Total Return Index and holds 32 stocks in its basket. Strive U.S. Semiconductor ETF has AUM of $80.4 million and charges 40 bps in annual fees. It trades in a volume of 50,000 shares per day on average and has a Zacks ETF Rank #2 (Buy). 

Invesco PHLX Semiconductor ETF (SOXQ) – Up 10.7%

Invesco PHLX Semiconductor ETF offers the largest U.S.-listed securities of companies engaged in the semiconductor business. It tracks the PHLX Semiconductor Sector Index, holding 30 stocks in its basket. Invesco PHLX Semiconductor ETF has accumulated $503.7 million in its asset base. It charges 19 bps in annual fees and trades in an average daily volume of 485,000 shares. SOXQ has a Zacks ETF Rank #1.

VanEck Vectors Semiconductor ETF (SMH) – Up 10.7%

VanEck Vectors Semiconductor ETF offers exposure to companies involved in semiconductor production and equipment. SMH follows the MVIS US Listed Semiconductor 25 Index, which measures the overall performance of companies involved in semiconductor production and equipment. It holds 26 stocks in its basket. VanEck Vectors Semiconductor ETF has managed assets worth $23.1 billion and charges 35 bps in annual fees and expenses. SMH is heavily traded with a volume of 9 million shares per day and has a Zacks ETF Rank #1 (Strong Buy), with a High risk outlook.

ARK Genomic Revolution ETF (ARKG) – Up 10.6%

ARK Genomic Revolution ETF is an actively managed fund focused on companies that are likely to benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments, and advancements in genomics into their business. With an AUM of $1.4 billion, ARK Genomic Revolution ETF holds 39 stocks in its basket and its expense ratio is 0.75%.

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