President Joe Biden has finally signed the $1.9-trillion coronavirus relief package, also known as the American Rescue Plan Act of 2021, into law. The optimism surrounding the bill passage was largely visible in the Wall Street rally on Mar 11. The S&P 500 index climbed 1% to 3,939.34, touching a fresh closing high. The Dow Jones Industrial Average added also rose 0.6%. Moreover, investors were seen going back to tech stocks as the Nasdaq Composite rallied 2.5% with Apple
AAPL
, Facebook
FB
, Alphabet
GOOGL
and Netflix
NFLX
all gaining at least 3%.
The coronavirus relief bill provides direct support to small businesses, $1,400 direct checks to Americans in the eligibility criteria, a rise in the child tax credit for a year, direct funding to state and local governments along with funding for schools and increased funds for coronavirus vaccine distribution and testing, per a CNBC article. However, the stimulus checks’ income limits have now been revised and the weekly unemployment benefits have been reduced from $400 to $300 by the Senate and will run through September, as stated in the article.
The reopening of the U.S. economy is also boosting confidence. As the U.S. economy opens and gradually moves toward normalcy, the demand for goods and services is likely to rise. In this regard, the Centers for Disease Control and Prevention announced that people who have completed the coronavirus vaccination process can safely hold indoor meets without the compulsion to wear masks, as mentioned in a CNBC article. Furthermore, California health officials gave a nod to Disney’s Disneyland and other theme parks along with outdoor stadiums and ball parks to reopen with limited capacity starting Apr 1, per the article.
The unemployment levels are also improving, which signals a recovering economy. The U.S. economy added 379,000 jobs in February 2021, after an upwardly revised 166,000 rise in January, beating market expectations of a rise of 182,000, per the verified sources. The U.S. unemployment rate slipped to 6.2% in February 2021, the lowest since April’s record high of 14.8% and below market expectations of 6.3%. Still, the unemployment rate remained well above the pre-pandemic levels.
Also, the latest Institute for Supply Management (ISM) Manufacturing PMI data for the United States is painting an impressive picture for the sector. The metric rose to 60.8 in February 2020 from 58.7 in January and surpassed forecasts of 58.8, per a Reuters article. Notably, the manufacturing sector, which makes up 11.9% of the U.S. economy, rose to a three-year high in February (per the same article).
With regard to coronavirus vaccine development and distribution, positive news is doing rounds. Biden has stated that the country is expected to have sufficient COVID-19 vaccines for adults who want to get vaccinated by the end of May, per a YahooFinance article.
ETFs to Ride the Wave
Investors who seek to capitalize on the strong trends should consider the following ETFs:
SPDR S&P 500 ETF Trust
SPY
This fund seeks to provide investment results that before expenses correspond generally to the price and the yield performance of the S&P 500 Index. Its AUM is $333.86 billion and the total expense ratio, 0.09% (read:
$1.9-T Stimulus to Boost U.S. Equity Demand? ETFs to Gain
).
iShares Core S&P 500 ETF
IVV
The fund seeks to track the investment results of an index composed of large-capitalization U.S. equities. Its AUM is $255.98 billion and the total expense ratio, 0.03% (read:
6 Red-Hot ETFs of February
).
Vanguard S&P 500 ETF
VOO
The fund seeks to track the performance of the S&P 500 Index. Its AUM is $199.89 billion and the total expense ratio, 0.03% (read:
Weekly ETF Roundup: International Tops, Nasdaq & Gold Bleed
).
SPDR Dow Jones Industrial Average ETF Trust
DIA
The fund seeks to provide investment results that before expenses correspond generally to the price and the yield performance of the Dow Jones Industrial Average. Its AUM is $27.11 billion and the total expense ratio, 0.16% (read:
5 Hottest Stocks in the Dow ETF
).
Invesco Dow Jones Industrial Average Dividend ETF
DJD
The fund is based on the Dow Jones Industrial Average Yield Weighted index. Its AUM is $117.4 million and the total expense ratio, 0.07% (read:
Dow Hits Record High: Will ETFs Rally Further?
).
iShares Dow Jones U.S. ETF
IYY
The fund seeks to track the investment results of a broad-based index composed of U.S. equities. Its AUM is $1.50 billion and the total expense ratio, 0.20%.
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