The rising number of coronavirus cases in the world’s largest economy has been a matter of concern for investors. The United States is seeing more than 150,000 daily number of coronavirus cases in August, reflecting a sharp spike from less than 10,000 in early July, as reported in a Reuters article.
Amid the resurging new cases, investors are also eagerly eyeing the Jackson Hole symposium for further visibility on the Fed’s possible timeline for tapering the fiscal stimulus support. The withdrawal of the stimulus support is expected to slow down the U.S. economic recovery achieved so far from the pandemic-led slump.
The resurging cases have frightened investors as they fear that implementation of new lockdown measures to control the spread may hurt the global economic recovery achieved so far, following the reopening of economies.
Considering the current market scenario, the FDA granting the first full U.S. approval to Pfizer PFE/BioNTech’s BNTX coronavirus vaccine, Comirnaty (BNT162b), has boosted investors’ confidence in some reopening bets like airlines and cruise operators.
According to the FDA, the approval has been provided after evaluating an enormous vaccine data covering about 40,000 trial participants and reflecting 91% efficiency in preventing COVID-19 (per a CNBC article). However, the vaccine is still under emergency use authorization for children aged 12 to 15 years, while Pfizer continues to collect more supporting data.
The full FDA approval is expected to increase the confidence for imposing vaccine mandates. Also, the unvaccinated population is now more likely to opt for vaccinations. According to a CNBC article, the Kaiser Family Foundation survey reflected that three in 10 unvaccinated adults were more likely to get jabbed if one of the vaccines is given full approval.
ETFs to Ride the Vaccine Optimism
Against this backdrop, let’s look at the following ETFs that are well-poised to gain as Comirnaty’s full FDA approval is likely to drive the vaccination rate:
The Energy Select Sector SPDR Fund XLE
The energy sector bled profusely due to the pandemic-induced historically low oil price levels, thanks to the dual blows of low demand and surplus supplies. Notably, a surge in coronavirus cases weighed on oil demand. However, reduction in oil supply, increased fiscal stimulus, rise in industrial production and a weak dollar are working in support of oil prices and will continue to favor the sector amid the re-opening of the U.S. economic scenario. XLE seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Energy Select Sector Index. The fund charges 0.12% in expense ratio (read: 4 Sector ETFs to Gain from Infrastructure Bill).
United States Oil Fund USO
The United States Oil Fund’s investment objective is for the daily changes, in percentage terms, of its shares’ net asset value (NAV) to reflect the daily changes, in percentage terms, of the spot price of light, sweet crude oil delivered to Cushing, OK, as measured by the daily changes in the Benchmark Oil Futures Contract. It has a total expense ratio of 0.83% (read: 5 Best Inverse/Leveraged ETF Areas of Last Week).
Fidelity MSCI Consumer Discretionary Index ETF FDIS
Fighting the pandemic through increased vaccination rates is likely to improve consumer confidence. The impressive consumer confidence levels can boost the consumer discretionary sector, which attracts a major portion of consumer spending. The fund intends to provide investment results that before expenses correspond generally with the price and yield performance of the MSCI USA IMI Consumer Discretionary Index. It charges investors 8 basis points in annual fees as stated in the prospectus (read: 5 Top-Ranked ETFs Looking Good After a Decent July).
Vanguard Industrials ETF VIS
The industrial sector, which faced disruption in global supply chains and factory closedowns, is expected to rebound on recovery from the coronavirus-led slump. The re-opening of the U.S. economy, accelerated coronavirus vaccine distribution and addition of stimulus are expected to drive demand and economic activities in the sector. The fund tracks the MSCI US Investable Market Industrials 25/50 index and has an expense ratio of 0.10% (read: How Are Industrial ETFs Reacting to Q2 Earnings?).
Vanguard S&P Small-Cap 600 ETF VIOO
Small-cap stocks, as indicated by the Russell 2000 Index, have outperformed the broader market and hit new all-time highs in the recent past. This upside is largely led by small-cap companies that are closely tied to the U.S. economy and thus are well-positioned to outperform when the economy improves. VIOO seeks to track the performance of the S&P Small-Cap 600 Index. It has an expense ratio of 0.10% (read: Here’s Why Small-Cap ETFs Are Sizzling With Opportunities).
U.S. Global Jets ETF JETS
The airlines industry received support from the reopening of the U.S. economy, accelerated coronavirus vaccine rollout initiatives and solid fiscal stimulus spending. However, the resurging COVID-19 cases from the highly-contagious delta variant will again result in declining air travel, with chances of new restrictions being imposed by the government. However, the FDA granting the first full U.S. approval to Pfizer/BioNTech’s coronavirus vaccine can bring a new wave of optimism for the sector. JETS provides investors access to the global airline industry, including airline operators and manufacturers across the world. The fund has an expense ratio of 0.60% (read: 4 Top-Ranked Sector ETFs to Buy at Cheap & Sell at High).
ETFMG Travel Tech ETF AWAY
The travel industry will be getting the much-needed boost from the reopening of the U.S. economy, accelerated coronavirus vaccine rollout initiatives and solid fiscal stimulus support. This fund is the first ETF to focus on technology-focused global travel and tourism companies. It charges an expense ratio of 0.75% (read: 2 Hotel & Restaurant ETFs Debut: Will They Taste Success?).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.