Seasonal Trends May Weigh on Stock ETFs | ETF Trends

Despite the negatives, such as the poorer-than-expected jobs numbers and Eurozone risks, U.S. equities, along with stock exchange traded funds, could remain within historical ranges, going into the summer months, says S&P analysts.

Even though the weaker-than-expected jobs report for April “will likely cause this market to endure further choppy action, we don’t see S&P 500 valuations or volatility drifting perilously close to upending extremes,” wrote Sam Stovall, Chief Equity Strategist at S&P Capital IQ, in a research note. [VIX ETFs Sputter as S&P 500 Tries to Break Range]

The trailing 12-month price-to-earnings and earnings yield were holding at the median going back to 1936 of 15.7 and 6.3, respectively.

Additionally, Stovall pointed out that the estimated first quarter year-over-year growth rate of 9.5% is within 1% of the median 8.9% growth rate since the 1930s. He also noted that year-over-year growth will bottom out at 9.0% in the third quarter.

“In other words, the recent deceleration of EPS gains is not necessarily something to be feared, but is reflective of typical reversion to the long-term average,” Stovall said.

However, the analyst also warns investors to take a defensive approach. [An ETF Trend-Following Plan for All Seasons]