Research > ETFs > ETF / ETP Commentary > 

Earnings Season Could Play Out Well for These ETFs

The start of April means the second quarter is officially here. That means first-quarter earnings season is right around the corner. Those reports could influence broader U.S. equity gauges, which notched solid showings in the first three months of the year.We will see how things play out during the upcoming earnings season.  There are encouraging signs, judged by the amount of negative earnings per share (EPS) revisions posted by sell-side analysts in the first quarter. That could be constructive for exchange traded funds such as the Invesco QQQ Trust (QQQ B+) and the Invesco NASDAQ 100 ETF (QQQM B). Both ETFs follow the Nasdaq-100 Index (NDX) – a tech-heavy gauge that’s higher by nearly 8% year-to-date. Data indicate negative EPS revisions in the January through March period were below-average. This could be promising for QQQ and QQQM.QQQ Sector Composition Matters for EarningsWhile S&P 500 earnings are widely observed, experienced investors know that the trends aren’t linear across the 11 sectors represented in the index and it could be sector composition that sets up QQQ and QQQM for earnings season success. “At the sector level, seven of the eleven sectors witnessed a decrease in their bottom-up EPS estimate for Q1 2024 from December 31 to March 27, led by the Materials (-13.0%) and Energy (-12.3%) sectors. On the other hand, four sectors recorded an increase in their bottom-up EPS estimate for Q1 2024 during this period, led by the Communication Services (+2.2%) sector,” noted John Butters of FactSet. Fortunately for QQQ and QQQM investors, the ETFs allocate 15.50% of their rosters to communication services stocks. Conversely, they allocate just 2.12% combined to the materials and energy sectors. There are other encouraging signs regarding EPS trends and the sector weights found in the two Invesco ETFs. “At the sector level, six sectors witnessed a decrease in their bottom-up EPS estimate for CY 2024 from December 31 to March 27, led by the Energy (-7.8%) and Materials (-5.0%) sectors. On the other hand, five sectors recorded an increase in their bottom-up EPS estimate for CY 2024 during this period, led by the Communication Services (2.2%) and Information Technology (1.8%) sectors,” added Butters. QQQ and QQQM allocate nearly half their weights to large- and mega-cap technology stocks. Therefore, the funds are credible proxies on EPS trends in that sector. For more news, information, and analysis, visit the ETF Education Channel.

Performance data shown is past performance and is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. Yield and return will vary, therefore you have a gain or loss when you sell your shares. For standard quarterly performance, go to the fund's Snapshot page by clicking on the ETF/ETP's symbol.

ETFs may trade at a premium or discount to their NAV and are subject to the market fluctuations of their underlying investments.

For iShares ETFs, Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with an exclusive long-term marketing program that includes promotion of iShares ETFs and inclusion of iShares funds in certain FBS platforms and investment programs. Please note, this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral. Additional information about the sources, amounts, and terms of compensation can be found in the ETF's prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice. BlackRock and iShares are registered trademarks of BlackRock, Inc. and its affiliates.

FBS receives compensation from the fund's advisor or its affiliates in connection with a marketing program that includes the promotion of this security and other ETFs to customers ("Marketing Program"). The Marketing Program creates incentives for FBS to encourage the purchase of certain ETFs. Additional information about the sources, amounts, and terms of compensation is in the ETF's prospectus and related documents. Please note that this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral.

News, commentary (including "Related Symbols") and events are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.

Any data, charts and other information provided on this page are intended to help self-directed investors evaluate exchange traded products (ETPs), including, but limited to exchange traded funds (ETFs) and exchange traded notes (ETNs). Criteria and inputs entered, including the choice to make ETP comparisons, are at the sole discretion of the user and are solely for the convenience of the user. Analyst opinions, ratings and reports are provided by third-parties unaffiliated with Fidelity. All information supplied or obtained from this page is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell a particular security, or a recommendation or endorsement by Fidelity of any security or investment strategy. Fidelity does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating ETPs. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use. Determine which securities are right for you based on your investment objectives, risk tolerance, financial situation and other individual factors and re-evaluate them on a periodic basis.

Before investing in any exchange traded product, you should consider its investment objective, risks, charges and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.