The technology sector is worth keeping track of as some major players are slated to report earnings this week. Social media giant Facebook
FB
saw its shares gaining more than 1% during the after-hours trading session on Oct 25. The company pleased Wall Street by surpassing earnings expectations.
Microsoft
MSFT
and Google-parent company Alphabet
GOOGL
are slated to release earnings results on Oct 26, after market close. Market pundits are optimistic about both the earnings releases. Microsoft is expected to gain on the back of strength in the Azure business. Alphabet earnings are expected to rise 43% higher year over year, as stated in a CNBC article.
Technology continues to play an instrumental role in the ongoing COVID-19 uncertainty by helping people maintain safe-distancing norms. Certain ‘new normal’ trends have also emerged amid the health crisis like work from home, increasing digital payments, growing video streaming as well as soaring video game sales. The pandemic is also a boon for the e-commerce industry as people continue staying indoors and shopping online for all essentials, especially food items.
Certain macro-economic factors are expected to keep supporting the technology space. The reopening U.S. economy and accelerated coronavirus vaccine distribution are expected to keep supporting the U.S. economic recovery from the pandemic-led slump.
The latest ISM Manufacturing Purchasing Managers’ Index (PMI) data for the United States paints a rosy picture of U.S. economic recovery. According to a Reuters article, the metric rose to 61.1% in September from 59.9% in August and surpassed forecasts of a decrease to 59.6%. Any reading above 50% indicates expansion in U.S. manufacturing activities. Notably, the manufacturing sector, which makes up 12% of the U.S. economy, saw the reading rise forthe 16th consecutive month.
In another encouraging development, a lower-than-expected number of weekly jobless claims added to investor optimism. Initial unemployment insurance claims in the week ending Oct 15 came in at 290,000, as mentioned in a CNBC article. According to the same article, the metric lagged the 300,000 level as estimated by the economists, per a Dow Jones survey.
ETFs to Gain
Investors aiming to ride the Nasdaq bulls could consider the following ETFs. These funds might see massive trading volumes in the days ahead if the aforementioned trends stay:
ProShares UltraPro QQQ
TQQQ
For a more bullish approach, TQQQ could be an excellent choice. It tracks the Nasdaq-100 Index but offers thrice the returns of the daily performance with the expense ratio of 0.95%. The fund managed AUM of $17.64 billion (read:
Best Leveraged ETF Areas of Past Decade
).
ProShares Ultra QQQ
QLD
Investors seeking big gains in a short span can bet on QLD. It provides twice the return of the Nasdaq-100 Index’s daily performance. The fund has AUM of $5.71 billion. It charges 95 basis points (bps) in fees and expenses.
Invesco QQQ
QQQ
This ETF provides exposure to 102 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq-100 Index. QQQ is one of the largest and most popular ETFs in the large-cap space, with AUM of $193.21 billion. It charges investors 20 bps in annual fees (read:
Best Leveraged ETF Areas of Past Decade
).
Fidelity Nasdaq Composite Index ETF
ONEQ
This ETF tracks the Nasdaq Composite Index, holding a broad basket of 1,007 stocks. It has AUM of $4.57 billion. The expense ratio comes in at 0.21% (read:
Guide to the Nasdaq ETF Investing
).
First Trust NASDAQ-100 Equal Weighted Index Fund
QQEW
Holding 102 stocks, this fund replicates as closely as possible, before fees and expenses, the price and yield of the NASDAQ-100 Equal Weighted Index. It amassed $1.37 billion in its asset base with an expense ratio of 58 bps.
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