Here're The Top-Performing Material ETFs Of Q1

Image: Shutterstock

The first quarter of 2021 has mostly been decent for investors. This eventful quarter saw President Joe Biden’s swearing-in ceremony, the passage of the $1.9-trillion coronavirus relief package, the Reddit mania which completely surprised the Wall Street players, accelerated coronavirus vaccine distributions, reopening global economies along with rising 10-year Treasury Note yield and now, the tax hike worries.

Notably, the Dow Jones Industrial Average and the S&P 500 surged 7.8% and 5.8%, respectively, in first quarter 2021. These indices witnessed their fourth straight positive quarter, per a CNBC article. Notably, cyclical sectors like industrial, financial, energy, and consumer discretionary saw increased attention from investors over the last three months. Markedly, stocks within the cyclical sectors mostly behave in tandem with the prevalent economic conditions and when growth returns to normal levels, these sectors will automatically perform well. In fact, the S&P 500 Materials Index gained 8.6% in the first quarter.

The materials sector, which tends to be the most sensitive to global economic growth expectations, is gaining from the Fed’s dovish stance. Notably, lower rates put pressure on the U.S. dollar that makes dollar-denominated materials cheaper for foreign investors. This, in turn, increases demand for products that these companies sell. Also, as the sector is highly dependent on interest rates for capital expenditures, lower rates act as a blessing.

The central bank has decided to maintain rates near zero until 2023, at least. Moreover, the central bank has raised its economic growth outlook considering the vaccine and stimulus optimism and it also expects higher inflation this year. The Fed has lifted its forecast for GDP growth to 6.5% in 2021 from 4.2% stated in December 2020. It has also raised the economic growth forecast from 3.2% to 3.3% for 2022. Moreover, growth is likely to cool down in 2023 to 2.2%. The Fed has predicted the longer-run growth measure at 2.3%.

1 2 3
View single page >> |

Disclaimer: Neither Zacks Investment Research, Inc. nor its Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the Information on the Web ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.