Stocks climbed on July 23, 2023, fueled by optimism that the United States would secure more trade agreements ahead of an approaching tariff deadline. The market was energized by news of recent and upcoming deals, helping push key indexes toward new highs.
The Dow Jones Industrial Average rose by 507.85 points (1.14%) to close at 45,010.29, narrowly missing a record by just four points. The S&P 500 gained 0.78% to finish at a record high of 6,358.91, marking its 12th all-time closing high this year and setting a new intraday record as well. Meanwhile, the Nasdaq Composite climbed 0.61% to settle at 21,020.02, its first-ever close above 21,000, as quoted on CNBC.
New U.S.-Japan Trade Deal Sparks Optimism
Investor sentiment improved after President Trump revealed late Tuesday on Truth Social that the United States had finalized a “massive Deal” with Japan, which includes reciprocal 15% tariffs on Japanese exports to the United States. Trump also noted that negotiations with the European Union were underway.
Progress with the EU and Other Countries
Markets received a further lift after the Financial Times reported that the United States is nearing a 15% tariff agreement with the EU, as quoted on the above-mentioned CNBC article. These trade developments came as part of a broader push by the United States to finalize agreements before the August 1 tariff deadline. Deals with Indonesia, China, and the United Kingdom have also recently been outlined.
Market Confidence in Tariff Strategy
Trump’s earlier announcement in April of sweeping tariffs had briefly rattled markets, but since then, investor confidence has been regained. Louis Navellier, founder and CIO at Navellier & Associates cited strong revenue generation, increased domestic investment, and minimal inflationary disruption are key market drivers.
Wednesday marked the second consecutive session where the S&P 500 closed at a record high. A total of 42 stocks in the index hit new 52-week highs, reflecting the growing bullish sentiment across Wall Street.
ETFs to Gain
Against this backdrop, below we highlight a few high-growth exchange-traded funds (ETFs) that could gain ahead as tariff threats look less severe than previously feared. We have highlighted low P/E growth ETFs that are still cheap in valuation, as the investing backdrop is still somewhat edgy. Note that the popular growth ETF Invesco QQQ Trust QQQ currently has a price-to-earnings (P/E) ratio of 39.98X.
Invesco S&P 500 Pure Growth ETF RPG – 25.99X
The underlying S&P 500 Pure Growth Index measures the performance of securities that exhibit strong growth characteristics in the S&P 500 Index. The fund charges 35 bps in fees.
Vanguard U.S. Momentum Factor ETF VFMO – 24.4X
The Vanguard U.S. Momentum Factor ETF seeks to provide long-term capital appreciation by investing in stocks with strong recent performance. The fund charges 13 bps in fees.
First Trust Mid Cap Growth AlphaDEX Fund FNY – 25.48X
The NASDAQ AlphaDEX Mid Cap Growth Index is an enhanced index, which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 600 Mid Cap Growth Index. The fund charges 70 bps in fees.
Invesco S&P MidCap 400 Pure Growth ETF RFG – 20.06X
The underlying S&P MidCap 400 Pure Growth Index measures the performance of securities that exhibit strong growth characteristics in the S&P MidCap 400 Index. The fund charges 35 bps in fees.
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Invesco QQQ (QQQ): ETF Research Reports
Invesco S&P 500 Pure Growth ETF (RPG): ETF Research Reports
Invesco S&P MidCap 400 Pure Growth ETF (RFG): ETF Research Reports
First Trust Mid Cap Growth AlphaDEX ETF (FNY): ETF Research Reports
Vanguard U.S. Momentum Factor ETF (VFMO): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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