- The VOO ETF stock price has dropped by 6% from its highest point this year.
- Data shows that the VOO ETF inflows are soaring this year.
- The S&P 500 Index has become a bargain, trading at 19.9 forward earnings.
The VOO ETF stock price has slumped by over 6% from its highest point this year as the Iranian war continued. This retreat has pushed more investors to press the sell button as the Fear and Greed Index has moved to the extreme fear zone. Still, there are signs that the VOO stock will surge to a record high soon.
VOO ETF Inflows are Soaring
One major catalyst for the VOO stock price is that investors are buying the dip. Data compiled by ETF shows that the fund has attracted over $27 billion in inflows this year, bringing its total assets to over $830 billion.
The ongoing ETF inflows are a sign that investors believe that the S&P 500 Index will continue rising in the foreseeable future. Also, the surge is mostly because of the ongoing rotation from the SPDR S&P 500 Index ETF (SPY), which has suffered over $33 billion in outflows this year because of its higher fees.
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Analysts Expect S&P 500 Index Earnings to Surge
The other main catalyst of the VOO stock is the upcoming earnings, which are expected to be higher than expected. Data shows that the average estimate among analysts is that the average earnings growth rate for the first quarter will be a whopping 13.2%.
If the estimate is accurate, it will be the sixth consecutive quarter of a double-digit earnings growth rate. In most cases, the real estimate is usually much higher than the estimate. As such, it may come in at 17%, with technology companies being the top performers.
US-Iran War Will Ultimately End
Meanwhile, history suggests that wars either end or investors embrace a new normal. A good example of the latter is the Russia-Ukraine war that started in 2022.
In this case, there is a possibility that the US-Iran war will end soon. For example, President Donald Trump has said that he expects his war to end in the next two to three weeks.
He has also threatened to bomb Iranian infrastructure later today, while Iran has threatened to intensify its attacks on its neighbors. These attacks will depend on what Trump does later today.
Still, there is a possibility that this escalation will be followed be a de-escalation, which will lead to a higher stock market. Indeed, history shows that strong stock market bull runs start when the Fear and Greed Index is in the extreme fear zone.
VOO Stock Has Become a Bargain
The US stock market has become a bargain, and most companies have dropped sharply in the past few months. Data shows that the average 12-month PE ratio has moved to 19.8x, slightly below the five-year average of 19.9.
Some of the fastest-growing companies have also become bargains. A good example of this is Micron, a top memory chip company whose forward PE ratio has dropped to 7.
NVIDIA stock has a multiple of 20 despite its strong revenue and profitability growth. Therefore, there is a likelihood that investors will go bargain hunting in the near term.
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