Market Decline Offers Strategic ETF Buying Opportunities

Wall Street has experienced significant turbulence recently, with a staggering $3.5 trillion wiped from market capitalization in just 14 days. Data from CompaniesMarketCap shows the total market capitalization of U.S. stocks decreased from $62.2 trillion on February 19 to $58.7 trillion by March 7. This loss exceeds the GDP of the United Kingdom and is roughly equivalent to the market value of Apple (AAPL) or the combined worth of Meta (META), Tesla (TSLA), and Netflix (NFLX).

The sharp price declines present a compelling buying opportunity for investors. Here, we highlight five ETFs from various sectors that have seen declines over the past month but hold a solid Zacks ETF Rank of #1 (Strong Buy) or #2 (Buy). The selected ETFs—Invesco Dorsey Wright Technology Momentum ETF (PTF), ProShares Big Data Refiners ETF (DAT), First Trust RBA American Industrial Renaissance ETF (AIRR), iShares Russell Mid-Cap Growth ETF (IWP), and Invesco S&P 500 Pure Growth ETF (RPG)—are poised for better performance when the market rebounds.

Factors Behind the Market Sell-Off

Tariff War: One major driver of the market downturn is the ongoing tariff war. President Donald Trump has imposed multiple tariffs, prompting retaliatory measures from other nations, which heightens the risk of a global trade war (see: Volatility ETFs Spike on Growing Trade War Fears).

Slowing Economy: A series of economic indicators suggests a slowdown in the U.S. economy. The Federal Reserve’s Beige Book and the Institute for Supply Management’s manufacturing report reveal concerns about increasing input costs linked to Trump’s tariff strategies. Moreover, manufacturing activity slowed, consumers’ confidence waned, and the pace of U.S. job growth has slackened.

Inflationary Pressure: Ongoing tariff discussions have raised alarms about a resurgence in inflation, potentially hindering economic growth. Currently, inflation remains elevated. After declining, it rose again in January due to higher grocery, gasoline, and rent prices. Consumers’ 12-month inflation expectations increased to 4.3%, the highest since November 2023, compared to 3.3% in January.

Why Consider Buying During the Dip?

It appears that the President is leveraging tariffs to confront trade imbalances and promote domestic manufacturing and investment. Trump’s administration has claimed that tax cuts and regulatory reductions will help lower inflation and encourage growth.

Additionally, a sluggish economy may prompt the Federal Reserve to consider interest rate cuts sooner. Following the release of the February jobs report, market expectations for a June interest rate cut have increased. Market participants are now forecasting three rate cuts this year (see: Low-Beta ETFs to Hedge Against Trade War Risks).

Furthermore, the growth in artificial intelligence (AI) is likely to continue driving market expansion. Significant investments in AI and related technologies have fostered optimism regarding future productivity improvements and overall economic growth. Companies are investing heavily in AI, anticipating long-term returns that support current valuations.

Given these conditions, investors may view the current market dip as an opportune moment to buy, provided they are prepared for potential volatility in the short-term.

Highlighted ETFs for Investment

Invesco Dorsey Wright Technology Momentum ETF (PTF) – Down 19.2%

This ETF focuses on 45 technology firms displaying strong relative strength (momentum) by tracking the Dorsey Wright Technology Technical Leaders Index. With an asset under management (AUM) of $494.2 million, it charges an annual fee of 60 basis points and holds a Zacks ETF Rank of #1.

ProShares Big Data Refiners ETF (DAT) – Down 14.7%

Investing in companies that help businesses analyze massive data sets, this ETF tracks the FactSet Big Data Refiners Index and has 31 stocks in its portfolio. It has an asset base of $6.5 million and annual fees of 58 basis points, holding a Zacks ETF Rank of #2 (see: Time to Buy the Dip in Palantir Stock With These ETFs?).

First Trust RBA American Industrial Renaissance ETF (AIRR) – Down 13%

This ETF targets small and mid-cap stocks within the industrial and community banking sectors by tracking the Richard Bernstein Advisors American Industrial Renaissance Index. It boasts an AUM of $3.3 billion, annual fees of 70 basis points, and a Zacks ETF Rank of #2.

iShares Russell Mid-Cap Growth ETF (IWP) – Down 12.2%

With a $17.1 billion AUM, this ETF offers exposure to mid-sized U.S. companies anticipated to achieve above-average earnings growth. It tracks the Russell MidCap Growth Index and contains 288 securities. IWP charges 23 basis points in annual fees and holds a Zacks ETF Rank of #2.

Invesco S&P 500 Pure Growth ETF (RPG) – Down 11.1%

This ETF focuses on high-growth companies within the S&P 500 Index. It tracks the S&P 500 Pure Growth Index and comprises 89 stocks. Holding an asset base of $1.6 billion, it charges an annual fee of 35 basis points and has a Zacks ETF Rank of #2.

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Apple Inc. (AAPL): Free Stock Analysis report

Netflix, Inc. (NFLX): Free Stock Analysis report

Tesla, Inc. (TSLA): Free Stock Analysis report

Invesco Dorsey Wright Technology Momentum ETF (PTF): ETF Research Reports

iShares Russell Mid-Cap Growth ETF (IWP): ETF Research Reports

First Trust RBA American Industrial Renaissance ETF (AIRR): ETF Research Reports

Invesco S&P 500 Pure Growth ETF (RPG): ETF Research Reports

Meta Platforms, Inc. (META): Free Stock Analysis report

ProShares Big Data Refiners ETF (DAT): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.