Escalating trade tensions and declines among tech names have clouded the market but every storm has a silver lining: bargain ETF picks in the sector.
U.S. stocks rebounded Tuesday after a rough start to the quarter, “The Dow Jones Industrial Average rose 231 points, or 1%, to 23875, while the S&P 500 rose 0.7% and the tech-heavy Nasdaq Composite climbed 0.8%. The gains come a day after the S&P 500 and Nasdaq Composite fell more than 2% as tech shares continued slumping.
The Prospect of Trade Wars
Beijing responded to Trump’s bump on steel and aluminum tariffs on Monday by imposing tariffs on $3 billion of US imports. The tariffs apply to 128 products, ranging from pork and meat to steep pipes. Trump plans to place tariffs on about $50 billion more of Chinese goods.
However, according to Wall Street Journal, “As risk appetite broadly improved Tuesday, haven assets gave back some of Monday’s gains. The yield on the U.S. 10-year Treasury note was 2.779%, up from Monday’s two-month low. Yields move inversely to prices. Gold fell 0.9% to $1334.70 an ounce and the dollar rose 0.6% against the yen, which tends to rise in times of market stress.”
FAAANG Gang Still Stumbling to Get Up
The FAANG quintet of Facebook Inc. (NASDAQ: FB), Amazon.com Inc. (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL), Netflix, Inc. (NASDAQ: NFLX) and Google parent Alphabet Inc. (NASDAQ: GOOGL) is an acronym for five high-performing technology stocks in the U.S. equity markets .
With the continual attacks on Amazon by Trump, the Facebook Cambridge Analytica scandal, and reports that Tesla may not make production goals, it’s no surprise that other FAANG members have been struggling.
The FAANG stocks were mixed Tuesday, with Facebook falling 0.2%. Shares of Netflix rose 1.9%.
The rebound comes after President Trump once again attacked Amazon on Twitter the day before.
10 Bargain Picks Due to Trade Wars and Tech Drama
However, because of all this drama, Amazon is a bargain pick right now, down 14% from its most recent high. Despite the heat that Amazon is taking from Trump, Amazon has been one of the most successful retailers and is likely to only continue to grow. ETFs with Amazon in them are all up YTD according to Yahoo Finance, 1:30 p.m. Eastern time.
5 ETFs with Exposure to Amazon All Up
- VanEck Vectors Retail ETF (RTH) – Amazon weighting: 15.13% up 5.91%.
- RTHVanEck Vct Rtl96.23-0.18%
- SPDR Consumer Discretionary Select Sector Fund (XLY) – Amazon weighting: 12.39% up 5.45%.
- XLYSel Sct Cns Dis105.93+0.21%
- First Trust DJ Internet Index Fund (FDN) – Amazon weighting: 10.04% up 12.04%.
- Fidelity MSCI Consumer Discretionary Index ETF (FDIS) – Amazon weighting: 9.95% up 4.29%.
- Vanguard Consumer Discretionary ETF (VCR) – Amazon weighting 9.90% up 4.35%.
Facebook is also a bargain pick right now, down 19% from it’s most recent high. Despite the media attention Facebook is getting over the Cambridge Analytica scandal, Facebook has been one the most successful social media platforms ever. ETFs with Facebook in them are all up YTD according to Yahoo Finance, 1:30 p.m. Eastern time.
5 ETFs with Exposure to Facebook All Up
- Global X Social Media Index ETF (SOCL) with 8.85% weighting up 11.08%.
- iShares U.S. Technology ETF (IYW) with 7.82% up 7.63%.
- Entrepreneur 30 Fund (ENTR) with 7.68% weighting up 8.50%
- First Trust Dow Jones Internet Index (FDN) with a 7.28% weighting up 12.04%.
- PowerShares NASDAQ Internet Portfolio (PNQI) with a 6.86% weighting up 13.66%.
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