- The S&P 500 Index has jumped to a record high this year.
- VOO and IVV ETFs have added over $77 billion in inflows this year.
- Technical analysis suggests that the index and its ETFs have more upside.
The S&P 500 Index and its top ETFs, like Vanguard’s VOO, State Street’s SPY, and BlackRock’s IVV, continued their bull run this week. They have officially entered a bull market after soaring over 20% from their lowest level this year.
Why IVV, SPY, and VOO ETFs Have Surged This Year
The index and its ETFs have continued to surge this year, thanks to the ongoing artificial intelligence (AI) boom and soaring earnings. Data compiled by FactSet, a leading analytics company, shows that average earnings growth was 28% in the first quarter, the largest increase since 2021.
A good example of this is Nvidia, the world’s largest company. In its recent earnings report, Nvidia said its revenue jumped 85% in the first quarter to $81 billion, and management believes it will exceed $91 billion this quarter.
Most of the earnings growth has been driven by the artificial intelligence boom, as evidenced by the top gainers in the index. SanDisk’s stock price has jumped by 602% this year, while Micron, Dell, Seagate, Western Digital, Intel, and Lumentum have jumped by over 171%.
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The other top gainers in the index are companies like AMD, ON Semiconductor, Hewlett-Packard Enterprise, and Corning. These stocks have all jumped by over 130% this year and are in the AI industry.
Meanwhile, there are signs that US bond yields have continued to fall over the past few weeks. Data shows that the US ten-year yield dropped to 4.5% from the year-to-date high of 4.684%. Similarly, the two-year yield dropped to 4%, a sign that analysts expect that the Federal Reserve will not hike interest rates this year.
Most notably, despite the ongoing AI boom, there are signs that the S&P 500 Index is not all that overvalued. It has a forward price-to-earnings ratio of 22, slightly higher than the five-year average of 19. This explains why top analysts at companies such as Goldman Sachs, Deutsche Bank, Morgan Stanley, and Citi are highly bullish on the index.
These numbers explain why investors are pumping their cash into these ETFs. The VOO ETF added over $66 billion this year and is slowly nearing the $1 trillion assets under management (AUM). The iShares Core S&P 500 ETF (IVV) has added over $10.2 billion in assets. On the other hand, the SPY ETF has lost $4.9 billion in assets because of its higher fees.
S&P 500 Index Technical Analysis
The daily chart shows that the S&P 500 Index has been in a strong rally this year and has recently entered a bull market. It has recently moved above the key resistance level at $7,000, the highest point in January this year.
The Average Directional Index (ADX) has jumped to 30 and is pointing upwards, a sign that the bull run is continuing. It has also remained above the Supertrend indicator.
Therefore, the most likely scenario is that the index continues to soar, potentially to $8,000. This surge will translate to more gains in the VOO, IVV, and SPY ETFs.
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