Unemployment woes appear to be subsiding, with the Bureau of Labor Statistics reporting 531,000 new jobs added in October and strong private payroll gains. In addition, President Biden signed a long-awaited trillion-dollar bipartisan infrastructure bill into law recently, which could boost the U.S. economy further. The spending package should not add to inflation worries while stimulating the economy, because spending from it is expected to be stretched over a long period.
Cyclical stocks tend to reflect broader economic performance. Thus, ETFs with exposure to cyclical sectors—Consumer Discretionary Select Sector SPDR Fund (XLY), iShares US Consumer Discretionary ETF (IYC), SPDR S&P Retail ETF (XRT), and Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RCD)—should perform well. These funds are rated A (Strong Buy) in our proprietary POWR Ratings system.