Yahoo Finance Time for Quality ETFs on Mounting Uncertainties?
Global shares experienced a slump on Jan 16, 2024 in response to fresh economic data that heightened concerns about China's economy. Moreover, investors scaled back their expectations for Federal Reserve interest rate cuts. Fed Governor Chris Waller expressed his belief that the Fed could lower interest rates in the coming year as long as inflation remains in check.
Overall,SPDR S&P 500 ETF Trust SPY was off 0.4%, SPDR Dow Jones Industrial Average ETF Trust DIA was down 0.6% and the NASDAQ Composite has lost 0.2% on Jan 16, 2024. All-world ETF iShares MSCI ACWI ETF ACWI retreated 0.9%, iShares MSCI Emerging Markets ETF EEM nosedived 2.4% and Vanguard FTSE Europe ETF VGK lost 1.9%.
Inside the Headlines
Fed Governor Chris Waller emphasized that the timing and extent of rate cuts would depend on incoming data. As a reflection of the changing expectations surrounding Fed rate cuts, the swaps market's pricing for a rate cut in March decreased from 80% to around 65% compared to the previous Friday.
In China, the Hang Seng Index in Hong Kong and the CSI 300 mainland Chinese benchmark recorded declines. These losses were driven by official figures indicating that while China met its 2023 economic target, the housing market's decline had worsened, and domestic demand remained sluggish.
Zhang Zhiwei, Chief Economist at Pinpoint Asset Management Co., noted that China's nominal GDP growth in 2023 was lower than its real GDP growth, signaling that the country may be growing below its potential rate, per Bloomberg, as quoted on Yahoo Finance.
A Chinese measure of economy-wide prices indicated its longest period of decline since 1999, leading to concerns of deflation. Robin Xing, Chief China Economist at Morgan Stanley, emphasized that prolonged deflation would require more significant policy stimulus, per Bloomberg.
In the commodities market, oil prices declined due to the strengthening of the U.S. dollar and a broader risk-off sentiment, despite escalating tensions in the Middle East, including ongoing attacks on ships in the Red Sea by Iran-backed Houthi rebels. United States Oil ETF USO was down 1.1% on Jan16, 2024.
In terms of U.S. earnings, Morgan Stanley shares faced a decline due to concerns about lower margins in wealth management. In contrast, Goldman Sachs Group Inc. saw a rise in its stock price as profits exceeded estimates. Meanwhile, Boeing Co. BA plunged 1.9% on Jan 16, 2024 following an analyst downgrade.
On the other hand, Apple Inc. AAPL slipped 1.2% as the U.S. Supreme Court refused to hear its appeal in an antitrust lawsuit challenging the App Store. In other corporate news, a federal judge blocked the merger deal between Spirit Airlines SAVE and JetBlue JBLU – which would have created the fifth-largest airline in the United States – due to antitrust concerns.
Why Quality Investing?
In the midst of these conflicting market signals, quality investing presents itself as a strategic approach to weathering market turbulence. Quality investing focuses on identifying companies with strong fundamentals, stable earnings, and durable competitive advantages. By investing in high-quality companies, investors can potentially mitigate the risks associated with economic downturns and market fluctuations.
ETFs in Focus
Against this backdrop, investors can bet on quality ETFs like WisdomTree U.S. Quality Growth Fund QGRW (up 4% past week), American Century U.S. Quality Growth ETF QGRO (up 3.8% past week), Pacer US Large Cap Cash Cows Growth Leaders ETF COWG (up 3% past week), iShares MSCI USA Quality Factor ETF QUAL (up 2.5% past week) and JPMorgan U.S. Quality Factor ETF JQUA (up 2.5% past week). In comparison to these ETFs, S&P500-based ETF SPY has gained 0.6% in the past week.
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The Boeing Company (BA) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
iShares MSCI Emerging Markets ETF (EEM): ETF Research Reports
United States Oil ETF (USO): ETF Research Reports
iShares MSCI USA Quality Factor ETF (QUAL): ETF Research Reports
iShares MSCI ACWI ETF (ACWI): ETF Research Reports
Vanguard FTSE Europe ETF (VGK): ETF Research Reports
JPMorgan U.S. Quality Factor ETF (JQUA): ETF Research Reports
American Century U.S. Quality Growth ETF (QGRO): ETF Research Reports
WisdomTree U.S. Quality Growth Fund (QGRW): ETF Research Reports
Pacer US Large Cap Cash Cows Growth Leaders ETF (COWG): ETF Research Reports
