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US Stimulus Should Support These 7 ETFs

Sanghamitra Saha

Global stocks have been rallying since last two days, backed by the bleak signs of slowing coronavirus spread in Italy, one of the worst-hit countries, and $2 trillion worth of U.S. coronavirus stimulus bill. While all the corners of the market witnessed an uptrend, the beaten-down zones bounced back even better.

In the past two days (as of Mar 25, 2020), SPDR S&P 500 ETF Trust SPY, SPDR Dow Jones Industrial Average ETF Trust DIA and Invesco QQQ Trust QQQ added about 10.7%, 13.9% and 6.9% in the past couple of days (read: Dow's Best Day Since 1933: Top Stock Gainers of the ETF).

But the below-mentioned zones and the related ETF should benefit considerably from the stimulus bill. Let’s delve a little deeper.

U.S. Global Jets ETF JETS — Up 29.7% in Past Two Days

U.S. airlines will be eligible to receive a combined $62-billion in federal loans and direct cash assistance to meet their payrolls, of which $25 billion in direct aid will go to passenger carriers, “$3 billion to airline contractors providing ground staff such as caterers, and $4 billion to cargo haulers”, per Bloomberg. The news sent airlines stocks on a flying mode (read: ETFs to Gain as New US Stimulus Package Gets a Nod).

iShares U.S. Aerospace & Defense ETF ITA — Up 23.8% in Past Two Days

Boeing takes about 14% of the fund ITA. Per a Reuters, Boeingplans to resume 737 MAX production by May, putting an end to the prolonged halt after its MAX jet fleet suffered deadly crashes. This news lifted investors’ sentiments. The U.S. government stimulus deal “includes $17 billion in loans earmarked for companies deemed critical to national security, which is intended to assist Boeing,” though no name was mentioned, per Bloomberg.

Invesco Dynamic Leisure and Entertainment ETF PEJ — Up 22.8% in Past Two Days

Entertainment industry has been one of the badly-hit areas by the coronavirus outbreak, be it cruise lines, hotels and casinos and event management companies. So, Fed assistance could be a game changer if the economy recovers soon.

Energy Select Sector SPDR Fund XLE — Up 21.5% in Past Two Days

Congress' $2-trillion worth coronavirus stimulus package is expected to boost liquidity in the economy, which in turn, should slower the pace of downturn in the economy. As a result, oil prices should get some relief and so do the energy companies (read: ETFs at Risk as Oil Slips to 18-Year Low on Coronavirus Crisis).

Financial Select Sector SPDR Fund XLF — Up 15.5% in Past Two Days

This area has been extremely battered by the ongoing crisis. Stimulus package may slim the chances of default. Also, risk-on sentiments may steepen the yield curve and benefit financial stocks greatly.

iShares Russell 2000 ETF IWM — Up 10.5% in Past Two Days

About $350 billion in the bill was allotted to small businesses. “Much of that will be in loans through the Small Business Administration and banks, guaranteed by federal government. The loans used for payroll, mortgage and rent will be forgiven. An additional $17 billion would enable the SBA to step in and make six months of principle and interest payments for all loans it backed” per Bloomberg. This makes the small-cap investing a bit easier during these tough times.

Health Care Select Sector SPDR Fund XLV — Up 9.1% in Past Two Days

The deal includes more than “$140 billion in appropriations to support the U.S. health system, $100 billion of which will be injected directly into hospitals.” Apart from the grant, some corners of the healthcare sector — for example a few biotech stocks — are benefiting from the coronavirus crisis (read: Coronavirus Scare Supports These Biotech ETFs & Stocks).

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Click to get this free report Energy Select Sector SPDR ETF (XLE): ETF Research Reports Financial Select Sector SPDR ETF (XLF): ETF Research Reports SPDR S&P 500 ETF (SPY): ETF Research Reports Invesco QQQ (QQQ): ETF Research Reports iShares Russell 2000 ETF (IWM): ETF Research Reports Health Care Select Sector SPDR ETF (XLV): ETF Research Reports SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports U.S. Global Jets ETF (JETS): ETF Research Reports iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports Invesco Dynamic Leisure and Entertainment ETF (PEJ): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report