5 Top Stocks In S&P 500 ETF As Biden Takes Office

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As Biden took oath as the 46th president of the United States, Wall Street hit another record high on the optimism that increased fiscal spending under the new administration would revive economic growth and bolster corporate earnings.

This is especially true as Biden signed a series of executive orders to reverse the policies of the Donald Trump administration on immigration, climate change, racial equality, and the handling of the coronavirus pandemic just hours after taking office. The new president promises to boost infrastructure spending to rebuild roads and bridges, as well as build high-tech infrastructure such as 5G networks. This, coupled with $1.9 trillion coronavirus-relief plan laid out early this month, will help the economy to get out the pandemic slowdown and heal the labor market. Additionally, the president aims to roll out 100 million vaccines in the first 100 days of his presidency.

Janet Yellen, Biden’s designated nominee for Treasury Secretary, infused further confidence in the stock market as she supported additional aid spending, urging Congress to “act big” on stimulus. Apart from Biden’s policies, solid results from Netflix (NFLX - Free Report) added to the strength, igniting a rally in the big tech stocks.

Notably, the S&P 500 climbed about 1.4%, marking the biggest gain in an Inauguration Day since 1985, when the S&P 500 rose 2.3% on the start of Ronald Reagan's second presidential term, according to LPL Financial data. The benchmark jumped 14.3% between Election Day and Inauguration Day, the biggest jump ever, topping that of President Hoover (13.3%) in 1929.

Against such a backdrop, the proxy version of the S&P 500 Index, SPDR S&P 500 ETF Trust (SPY - Free Report), has also gained 1.4% on Biden’s Inauguration Day. Let’s take a closer look at the fundamentals of SPY and its best stocks:

Inside the SPY

The ETF holds 504 stocks in its basket with each accounting for no more than 6.4% of assets. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, healthcare, consumer discretionary, financials, and communication services accounting for a double-digit allocation each. It has AUM of $334.5 billion and charges 9 bps in fees per year. The product trades in heavy volume of around 593 million shares a day on average, ensuring higher liquidity with a tight bid/ask spread, leading to lower trading costs for investors.

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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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