Investors this week have moved beyond the coronavirus pandemic and began betting on statewide reopenings as the catalyst to lift the economy from its deepening lows. Exchange-traded funds that follow major market benchmarks have also gained with the market due to the increased positivity. The SPDR Dow Jones Industrial Average ETF (NYSE: DIA) and SPDR S&P 500 ETF (NYSE: SPY) have both ended the week in with gains. The Invesco QQQ Trust (NASDAQ:QQQ), which follows the Nasdaq, was also boosted throughout the week, lifted by technology companies that have adapted to the coronavirus pandemic.
QQQ has shown that it is less affected by the coronavirus compared to other major index ETFs due to its portfolio. The ETF is loaded heavily with the Technology sector, which are followed by large percentages of Communication Services, Consumer Discretionary and Health Care. Technology companies--especially Facebook (NASDAQ: FB), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Netflix (NASDAQ: NFLX), Google (NASDAQ: GOOGL) and Microsoft (NASDAQ: MSFT)---have shown that they are able to evolve quickly in response to the pandemic and their business models are hardly affected by stay-at-home orders due to most employees only needing a computer complete their duties.
Communication Services also offers QQQ an advantage, for this sector contains large internet providers that have become an essential utility during the pandemic. Furthermore, Consumer Discretionary, which includes more cyclical stocks, and Health Care, which contains more defensive stocks, balance each other out, helping QQQ weather more unfavorable market conditions.
Other tech-focused ETFs include Technology Select Sector SPDR Fund (NYSE: XLK) and Vanguard Information Technology ETF (NYSE: VGT)
In addition to tech giants, fintech and ecommerce ETFs have also gained this week, mostly due to the heighten need for contactless transactions and surges in online shopping. Lead by companies like PayPal (NASDAQ: PYPL) and Square (NYSE: SQ), fintech ETFs have only more room to grow as the pandemic continues to alter payment methods, with Square recently offering a new payment tool for small businesses to adapt to ecommerce transactions. Popular ETFs in this space include Global X FinTech (NASDAQ: FINX), ETFMC Prime Mobile Payments ETF (NYSE: IPAY), Amplify Online Retail ETF (NASDAQ: IBUY) and ProShares Online Retail ETF (NYSE: ONLN).