As the greenback begins to take back some of the ground it has recently lost, investors are befuddled as to where they should allocate their assets. Some are still bullish on gold or fixed income, while others believe that these two asset classes have hit their peaks, and are due for a nasty correction in the near term. Still others remain bullish on plain-vanilla equities, citing relatively cheap valuations as one of the chief reasons to buy in to the recovery that many believe is currently in full force. No matter which side of the coin you fall on, earnings season is always a big tell for how the individual sectors and companies have performed over the last three months. This week falls in the midst of earnings season yet again, leaving plenty to look forward to, as some of the nation's most respected companies release their most recent quarter's results [see also Three ETFs To Watch During The Great Currency War Of 2010].
Below, we profile three ETFs that could be active this week [for more ETF ideas, sign up for our free ETF newsletter]:
iShares Dow Jones U.S. Energy Sector Fund
Why IYE Will Be In Focus: The energy sector has been in the spotlight this year, with the Deepwater Horizon spill providing negative attention for many of the country's top integrated oil firms. On Thursday, Exxon Mobil
IYE has a considerable holding in Exxon Mobil (24.1%) along with other big name oil firms like Schlumberger (6.4%), who reported strong earnings last week, leading investors to be hopeful that Exxon can replicate these results. Thus far in 2010, this ETF has returned roughly 2.3% with a dividend yield of 1.4%. Accounting for roughly a quarter of this fund's assets, Exxon Mobil's report will be a big mover for not only this ETF, but the entire stock market, making it perhaps the most anticipated earnings release of the week [see also Energy ETFs: Global Or U.S.?].
HOLDRS Merrill Lynch Semiconductor
Why SMH Will Be In Focus: Semiconductor firms have seen a healthy growth recently because of a large boost in the tech sector as new devices like smartphones and tablets are constantly released, which has helped to keep up demand despite declining PC sales. This sector was also given a boost two weeks ago, when Intel crushed their earnings marks; revenues jumped by 59% from the previous quarter, proving that the back-to-school rush was strong despite economic uncertainty.
SMH holds a total of 18 securities, with Texas Instruments
Vanguard S&P 500 ETF (VOO)
Why VOO Will Be In Focus: Though markets saw an impressive growth in September, this month has been a bit more up and down, worrying many that equities are still not a safe play. One of the most important economic indicators to comment on how our nation has performed is the Gross Domestic Product, which is the overall output of goods and services of the U.S. economy. On Friday of this week, the government will release the GDP growth figures for the third quarter of 2010, which are expected to jump to 2.2% from the previous 1.7%.
VOO is made up of the strongest, and largest companies in the U.S., including Exxon Mobil (3.1%), Apple (2.5%), and Microsoft (1.9%). While the GDP figures will impact almost every corner of the market, VOO should be particularly active as it is heavily-weighted in these top companies which look to in focus as the country's growth level is reported. If the GDP jumps as analysts have predicted, VOO may surge, but a lower than expected GDP could crush this fund and investor confidence alike.
Disclosure: No positions at time of writing.
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