5 Red Hot Stocks That Drove Nasdaq ETF To New Highs

The Nasdaq Composite Index reached another all-time high amid the coronavirus epidemic that has hurt business operations in the world's second-largest economy. This was driven by China’s stimulus measures, which helped soothe investor nerves.

The People’s Bank of China has injected $1.7 trillion yuan ($242.9 billion) into the economy via reverse repos and unexpectedly lowered interest rates on reverse repurchase agreements by 10 basis points (bps). The move led to a strong rally in the technology sector, which has huge exposure to China and helped the tech-laden Nasdaq Composite Index to reach new highs. The initial U.S.-China trade deal is also providing a boost to the tech stocks.

Additionally, a solid rebound in the U.S. manufacturing sector, which had languished in contraction territory for five months, boosted investors’ confidence in the economy and the stock market. The Institute for Supply Management’s PMI rose to 50.9 in January from a December reading of 47.8, with strength in new orders, production, and exports.

As a result, Invesco QQQ (QQQ - Free Report), which serves as a proxy for the index, also hit new highs, having gained 7% so far this year. Let’s take a closer look at the fundamentals of QQQ.

QQQ in Focus

This ETF provides exposure to 103 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. Information technology accounts for 47.5% of the assets, while communication services holds 21% share. QQQ is one of the largest and most popular ETFs in the large-cap space with AUM of $89.9 billion and average daily volume of around 25.7 million shares. It charges investors 20 bps in annual fees. The fund has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

Though most of the stocks in the fund’s portfolio have delivered strong returns so far this year, a few were the real stars, having gained in double-digits. Below we have highlighted the five best-performing stocks in the ETF with their respective positions in the fund’s basket:

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