The momentum seen in 2017 has carried over into this year as the S&P 500 logged in six consecutive records closing in its first six trading sessions, marking the longest winning streak since 1964. However, two separate reports from Bloomberg and Reuters led to some nervousness among investors in the latest trading session.
The Bloomberg report says that China, the biggest buyer of U.S. sovereign bonds, could slow down or halt its purchase of U.S. Treasuries while the Reuters report suggests that Canadian official expect President Donald Trump will exit the North American Free Trade Agreement. The news has pushed down the stocks, leading to the first drop of 2018 in the U.S. bourses. This pullback could be just a pause in the rally as traders took the chance to book some profits after a record run.
This is because strong market fundamentals remained intact. Another quarter of strong corporate earnings expectation, Trump’s tax overhaul, rising oil prices and slew of upbeat economic data are solidifying the bullishness in the market. Notably, U.S. factory activity, as indicated by the Institute for Supply Management (ISM) index, increased more than expected in December with the second-highest reading in six years buoyed by a surge in new orders growth. Construction spending hit record highs in November with broad-based gains in both private and public outlays.
The market is expecting companies to come up with rising earnings estimates driven by tax cut savings when they report earnings this quarter. A pick up in the global economy is already fueling growth. The unexpected decision by Bank of Japan to trim its long-dated government bonds purchases signals the strength in the growing Japanese economy.
Given this, investors could tap the latest stock dips with ETFs that have shown strong momentum to start the year and has a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy). Below we have presented a bunch of those that have easily crushed the S&P 500 in the past seven trading sessions and will continue to outperform heading into the strong earnings season.
