5 Top-Ranked Stocks Driving ETF As S&P 500 Nears New Highs

After Nasdaq, it’s now the turn of the S&P 500 Index to hit new highs. The benchmark has recovered all the losses made during the pandemic and is just a few points away from February’s all-time high. Notably, it has rallied more than 50% since the March lows.  

The bullish trend is likely to continue given the strong fundamentals. This is especially true given a combination of unprecedented levels of fiscal and monetary stimulus, positive developments in coronavirus vaccines, and recovering economic activities. In particular, the latest industry gauge indicates that U.S. manufacturing activity expanded in July at the fastest pace in 15 months. The unemployment rate dropped to 10.2% in July, below June's 11.1% mark.

Additionally, an improving outlook on the COVID-19 case front in the United States coupled with better-than-expected earnings bolstered investors’ confidence. Virus-related hospitalizations in Texas fell to the lowest level since early July on Aug 12, and hospitalizations in California also extended a downward trend. The ascent in stocks came despite the lingering uncertainty over the economic and political outlook.

Further, a rise in mergers and acquisitions and a weak dollar led to a spike in the stock market. The recent dollar weakness is acting as a huge tailwind for the mega-cap companies, which derive most of their revenues from international markets. This is because a weak dollar has made dollar-denominated assets cheap for foreign investors, making U.S. multinationals more competitive and leading to increased profits. As such, companies having a higher percentage of international sales may outperform.

The new executive orders signed by President Donald Trump aimed at extending the coronavirus relief will further act as a catalyst for the stocks.

Against such a backdrop, the proxy version of the S&P 500 Index, SPDR S&P 500 ETF Trust (SPY - Free Report), has gained nearly 6% in the year-to-date timeframe. Let’s take a closer look at the fundamentals of SPY and its best stocks:

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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 specific ...

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