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Best ETFs, Funds, and Stocks of Q1. What’s Ahead for Q2?

Hopes of an acceleration in economic growth, aided by vaccine rollouts and stimulus, helped U. S. stocks climb to new highs in the first quarter of 2021. The top ETFs, Fidelity funds, and S&P 500 stocks raked in double-digit gains in this environment. Here is a list of the best of the best, along with what to look forward to in the second quarter.

The S&P 500 ended the first quarter at a record high after gaining 6.2%. The rollout of vaccines and the implementation of the American Rescue Plan Act of 2021 brightened economic prospects. The Federal Reserve recently raised the 2021 U. S. GDP growth forecast to 6.5%.

Fears of inflation rose. The yield on the 10-year Treasury bond surged to 1.75% from 0.92% at the start of 2021. Rising bond yields changed the nature of the stock price rally. Secular growth stocks, the favorites in 2020, lagged. Instead, value stocks and small-cap stocks led the way.

Here, we look at what ETFs, Select SPDRs, Fidelity funds, and S&P 500 stocks returned the most in the first quarter.

Best ETFs of 1Q 2021

Blockchain, cannabis, energy, and retailing were themes that worked well in the ETF world.

  • Amplify Trans Data Sharing (BLOK)       +59.6%
  • ETFMG Alternative Harvest (MJ)       +59.6%
  • SPDR S&P Oil & Gas E & P (XOP)       +39.0%
  • SPDR S&P Retail (XRT)       +38.7%
  • Vanguard Energy Index Fund (VDE)       +31.1%

Best Select Sector SPDR ETFs of 1Q 2021

Energy Select Sector SPDR and Financial Select Sector SPDR ETFs took the top positions. Stocks of mega-cap companies like Exxon Mobil and JPMorgan Chase benefited from rising oil prices and higher interest rates, respectively.

  • Energy Select Sector SPDR Fund (XLE)       +31.6%
  • Financial Select Sector SPDR Fund (XLF)       +18.4%
  • Industrial Select Sector SPDR Fund XLI)       +12.1%
  • Communication Services Select Sector SPDR (XLC)       +11.4%
  • Real Estate Select Sector SPDR Fund (XLRE)       +11.1%

Best Fidelity Funds of 1Q 2021

Brightening prospects of economic growth helped Fidelity funds focused on energy, banking, and the small cap value category claim top honors.

  • Fidelity Select Energy (FSENX)      +27.3%
  • Fidelity Select Banking (FSRBX)      +26.6%
  • Fidelity Select Energy Service (FSESX)      +22.5%
  • Fidelity Small Cap Value (FCPVX)      +22.2%
  • Fidelity Select Natural Gas (FSNGX)     +21.6%

Best S&P 500 Stocks of 1Q 2021

Three of the top five winners for the quarter were oil & gas producers. Marathon Oil, Diamondback Energy, and Occidental Petroleum that had suffered from falling oil & gas prices and weak finances surged as oil prices rebounded. Semiconductor chip shortage boosted Applied Materials. Retailer L Brands hiked its profit outlook for the current quarter and planned to reinstate an annual dividend.

  • Marathon Oil (MRO)       +73.4%
  • Diamondback Energy (FANG)       +64.9%
  • Applied Materials (AMAT)       +62.7%
  • L Brands (LB)       +62.5%
  • Occidental Petroleum (OXY)       +52.9%

Looking ahead to 2Q 2021

A relatively quiet week lies ahead before the start of the first-quarter earnings reporting season. Interest rates and inflation are likely to dominate trading moves as the stock market gets its first opportunity to react to the March jobs report. The FOMC meeting minutes and PPI data offer scope for fresh perspectives on inflation.

* The stock and bond markets will react to the blowout March jobs report that came out on the Good Friday holiday. The Labor Department reported the U. S. economy added 916,000 jobs, compared to 675,000 expected by economists. The yield on the 10-year Treasury bond ticked higher by 0.04% in Friday’s quiet holiday trading.

* Investors will get to read the Federal Reserve’s current thinking on inflation when the minutes on the last FOMC meeting are released on Wednesday. The Bureau of Labor Statistics will provide a perspective on inflation when it reports the producer price index on Friday.

* The earnings calendar is relatively light before the first-quarter reporting season starts in earnest during the week of April 15.

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