For Immediate Release
Chicago, IL – August 23, 2024 – Zacks.com announces the list of stocks and ETFs featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. ETFs recently featured in the blog include: Vanguard Dividend Appreciation ETF VIG, iShares Core Dividend Growth ETF DGRO, Core Alternative ETF CCOR, Innovator Defined Wealth Shield ETF BALT, Consumer Staples Select Sector SPDR ETF XLP and Vanguard Health Care ETF VHT.
Here are highlights from Thursday’s Analyst Blog:
More Volatility Ahead? ETF Strategies to Play
August has been a turbulent month for financial markets, with volatility showing a spike. Recessionary fears and the tech slump mainly led to the volatility in Wall Street. At the beginning of the month, a weaker-than-expected U.S. jobs report fueled fears of a potential recession, leading to a decline in U.S. stock markets. Plus, a more hawkish tone from the Bank of Japan triggered an unwinding of the yen “carry trade,” leading the Nikkei index to decline by more than 12%.
VIX Spike and Market Overreaction
On Aug 5, the VIX, a key indicator of expected market volatility, surged to 65 from around 23 on the previous trading day. However, the index quickly retraced as the markets gained momentum. Gerry Fowler, head of European equity strategy and global derivative strategy at UBS, described this spike as a “huge overreaction” during an interview on CNBC’s “Squawk Box Europe.”
More Volatility Ahead?
Fowler noted that UBS had anticipated an increase in volatility this year, due to declining nominal GDP, interest rate cuts, and uncertainty in the jobs market. He explained that while the recent volatility matches his expectations, the magnitude of the spike and subsequent pullback both appear to be exaggerated.
Looking forward, Fowler suggested that UBS expects markets to stabilize at slightly higher levels of volatility. Further, volatility is dependent on U.S. economic conditions. Against this backdrop, below we highlight a few ETF strategies that can help weather market volatility.
Focus on Dividends
Dividend-paying stocks provide a steady income stream and help mitigate potential losses during weaker market periods. These stocks offer the best of both worlds — safety in the form of payouts and stability in the form of mature companies that are less volatile to the large swings in stock prices. The companies that pay dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis.
Source:- yahoo.finance
