ETF Watchlist: Week of July 31, 2017

Boeing (BA) powered the Dow to a more than 1% gain this past week thanks to a strong second quarter earnings report that included raised guidance for the remainder of 2017. The other major averages were largely unchanged overall, although Thursday saw a big intraday drop in tech stocks. The Dow and S&P 500 are now up more than 10% on the year with the Nasdaq still up an impressive 18%.

Washington once again dominated the headlines with the late night failed attempt by the Senate to repeal parts of the Obamacare law taking center stage. The financial markets seemed to largely take things in stride, a common theme for the last several months. Even in light of events surrounding Russia, China and North Korea, the markets have remained stoic.

In other news…

• Washington once again dominated the headlines with the late night failed attempt by the Senate to repeal parts of the Obamacare law taking center stage. The financial markets seemed to largely take things in stride, a common theme for the last several months. Even in light of events surrounding Russia, China and North Korea, the markets have remained stoic.
• The quarterly Fed meeting saw interest rate left unchanged, as expected. The market treated it pretty much as a non-event with the major indices little changed following the announcement. Janet Yellen expressed some concern over the state of the consumer putting into some question whether we’ll see another hike before the end of the year. The upcoming state of the Fed balance sheet unwind should be welcome news.
• Lots of economic data coming this week with Friday’s payroll and unemployment report garnering the most attention. Things will likely continue to look strong with the market reacting little to the news once again.

Despite the plethora of news hitting the market this week, expect it to be relatively quiet overall. Here are this week’s four ETFs to keep an eye on.

Healthcare Select Sector SPDR ETF (XLV)

Despite events in Washington and the seemingly never-ending affair to modify the current healthcare system, several of the sector’s biggest names report earnings this week. Humana (HUM), Pfizer (PFE), Cigna (CI), Regeneron (RGN), Incyte (INCY) and Allergan (AGN) are scheduled to deliver pretty evenly throughout the week.

Others: iShares U.S. Pharmaceuticals ETF (IHE), iShares U.S. Healthcare ETF (IYH), Vanguard Healthcare ETF (VHT)

iShares PHLX Semiconductor ETF (SOXX)

Semiconductors have been a bright spot in 2017 with the sector gaining more than 20%. Intel’s (INTC) earnings report last week was solid, but it failed to push the Semiconductor ETF higher. The last couple of months have been volatile, while much of the sector is scheduled to deliver earnings in the coming weeks.

Others: VanEck Vectors Semiconductor ETF (SMH), SPDR S&P Semiconductor ETF (XSD)

VanEck Vectors Morningstar Wide Moat ETF (MOAT)

Wide moat investing is a Warren Buffett endorsed strategy. It involves investing in companies that enjoy a strong competitive advantage and makes it difficult for competitors to capture market share. Wide moat investing is a particularly intriguing strategy for those who wish to position their portfolios defensively since companies with wide moats should be more impervious to economic downturns.

The Wide Moat ETF has returned 95% since its inception in 2012 compared to a 81% return for the S&P 500 during the same time frame.

ProShares Equities for Rising Rates ETF (EQRR)

A brand new ETF wraps up this week’s list. ProShares debuts its Equities for Rising Rates ETF to create a portfolio designed to take advantage of the expected rising interest rate environment. The fund targets the five sectors - financials, energy, industrials, materials and technology - that have demonstrated the strongest correlation to the 10-year Treasury yield over the past three years. This fund could also be an interesting choice for dividend investors as it currently sports a 2.6% yield.

Others: Fidelity Dividend ETF for Rising Rates (FDRR)