Sector ETFs to Play the State of the Union Address

January 26th at 12:00pm by Tom Lydon

In his State of the Union address Tuesday, President Barack Obama touched upon the major problems that have crippled our nation and offered an essential directive to invest in our future. If Obama’s proposals become actualities, something that’s not necessarily a certainty, then the exchange traded funds (ETFs) below could make moves.

President Obama stressed the need to “win the future,” or the greater need for innovations in research and technology, with countries like China and India looking right over our shoulders, report Anne E. Komblut and Scott Wilson for The Washington Post.

  • iShares Dow Jones U.S. Technology Sector Index Fund (NYSEArca: IYW)
  • Technology Select Sector SPDR (NYSEArca: XLK)
  • PowerShares QQQ (NASDAQ: QQQQ)

In light of the steep budget deficits, Obama called for major budget reforms, proposing a five-year halt in discretionary spending and billions in defense cuts. Defense ETFs could see declines if defense contractors don’t have other things going to generate revenue.

  • PowerShares Aerospace & Defense (NYSEArca: PPA)
  • iShares Dow Jones U.S. Aerospace & Defense (NYSEArca: ITA)

Obama specifically addressed the need to increase math and science teacher training, along with investing in and developing clean-energy technology. Additionally, he remarked upon the investments in infrastructure and energy innovation, which he has also discussed in his first address to Congress in 2009.

  • Market Vectors Global Alternative Energy (NYSEArca: GEX)
  • PowerShares WilderHill Clean Energy (NYSEArca: PBW)
  • ESG Shares North America Sustainability (NYSEArca: NASI)
  • First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (NYSEArca: GRID)

Additionally, he stands by his health-care overhaul, but he is willing to accept minor changes to “flaws” in the law, but he maintains that he is not willing to “go back to the days when insurance companies could deny someone coverage because of a preexisting condition.”

  • iShares Nasdaq Biotechnology (NASDAQ: IBB)
  • SPDR S&P Biotech ETF (NYSEArca: XBI)
  • First Trust Amex Biotech (NYSEAca: FBT)
  • iShares Dow Jones U.S. Healthcare Provider (NYSEArca: IHF)
  • PowerShares Dynamic Pharmaceuticals (NYSEArca: PJP)
  • First Trust Health Care AlphaDEX (NYSEArca: FXH)

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.