Sunday, June 16, 2024

Watch SPY, QQQ inflows with Dow rise to 40,000 sparking ‘FOMU’ – Goldman’s Scott Rubner

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Stock trading. Couple on TradingView app at home office.

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Watch inflows into some of the biggest U.S. equity exchange-traded funds next week with stocks at record highs stoking so-called “FOMU,” among investors, Goldman Sachs Managing Director Scott Rubner said.

The Dow Jones Industrial Average (DJI) crossing over and closing above 40,000 for the first time this week is turning heads, alongside record closes for the S&P (SP500)(VOO) and the Nasdaq Composite (COMP:IND). Stocks climbed as moderating inflation in April refreshed bets for rate cuts this year by the Federal Reserve.

“I am starting to have conversations regarding FOMU – fear of materially underperforming – this week heading into a positive trading window for the ‘US 60/40 portfolio’,” Rubner said in a note Friday, pointing out that #DOW40K was a trending hashtag on social media.

With the biggest equity owner – US civilian households – scoring a win versus the bears, Rubner said watch inflows into ETF behemoths SPDR S&P 500 ETF Trust (NYSEARCA:SPY) and Invesco QQQ Trust ETF (QQQ) next week following the record-breaking moves on Wall Street.

“Given the highly publicized euphoric headlines here that ‘everything is working’, there is potential for the stable retail cohort to add ‘a little bit more of the 60/40 portfolio’ this weekend after checking trading statements,” Rubner said.

The “stable retail cohort” of U.S. households owns 39% of the $78 trillion stock market in cash equities, and 65% including mutual funds and ETFs, Rubner said. “Flows follow performance,” he said.

Bank of America separately this week said weekly inflows into equity funds reached $11.9 billion, citing EPFR data. Outflows from money markets were $3.7 billion.

So far this year, the S&P 500 (SP500) and the Nasdaq Composite (COMP:IND) have each risen ~11%. The Dow industrials are up nearly 6%.

Here are some other equity ETFs on the market:

  • iShares Core S&P 500 ETF (IVV)
  • Vanguard Total Stock Market ETF (VTI)
  • iShares Russell 1000 Growth ETF (IWF)
  • ProShares UltraShort S&P500 (SDS)
  • Direxion Daily Semiconductor Bear 3x Shares (SOXS)

Also, see how Treasury yields have done across the curve at the Seeking Alpha bond page.

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