Top-Ranked Sector ETFs & Stocks For Q4

U.S. stocks had a smooth ride in the third quarter with the S&P 500 notching a gain of 3.3%, representing the best quarter of 2016. In fact, this was the largest rise since the final three months of 2015.

The impressive rally was driven by better-than-expected earnings reports, higher oil prices and a more accommodative Fed monetary policy. The trend is likely to continue in the fourth quarter as well given renewed investor confidence in the market. This is especially true against the backdrop of the Fed’s continued dovish stance, increased chances of the Democrat candidate, Hillary Clinton, winning the November election and the OPEC agreement to cut oil output.

In fact, recent consumer sentiment surveys have been extremely positive with the monthly Consumer Confidence Index, measured by the Conference Board, climbing for the second consecutive month in September and currently hovering at its highest level since the recession. Consumer confidence, as per the final University of Michigan, climbed for the first time in four months, with the index rising to 91.2 in September from the preliminary reading of 89.8. These suggest increased spending and thereby pave the way for better economic growth.

Additionally, after four straight quarters of negative profit growth, the third-quarter earnings season for the S&P 500 index is expected to be the turning point wherein growth could come by, as per earnings tracker Thomson Reuters I/B/E/S. However, volatility is the key concern for the final quarter of 2016 given corporate earnings, the presidential election, the final OPEC deal, and the possible rate hike by the Fed in December. All these will continue to weigh on investor sentiment.

Against such a backdrop, investors could be well served by looking at the ETFs and stocks of the top-performing sectors.

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