Will Nasdaq ETFs Continue Their Rally Going Into Q2 Earnings?

Market Overview - The Nasdaq Composite Index has been reaching new records, driven by strong corporate earnings, AI optimism, and expectations of Federal Reserve policy support [1] - ETFs tracking the Nasdaq, such as Invesco QQQ and QQQM, have gained momentum alongside the index [1] Earnings Season - The second-quarter earnings season has started strong, with S&P 500 earnings from 62 companies up 9.3% year-over-year, supported by a 5.8% increase in revenues [2] - Approximately 82.3% of companies have beaten EPS estimates, indicating a favorable outlook for future earnings [2] AI Impact - The generative AI trend is a significant growth driver for Nasdaq, with increased demand for data centers, GPUs, and AI-focused software [4] - Companies like Advanced Micro Devices, Broadcom, and Palantir are experiencing heightened investor interest due to their involvement in AI [4] Interest Rate Expectations - Markets are anticipating at least one rate cut by the Federal Reserve later this year, which would benefit high-growth tech stocks sensitive to borrowing costs [5] - Fed Chair Jerome Powell's upcoming speech may provide further insights into monetary policy direction [5] Global Investment Trends - International investors are increasingly returning to U.S. tech stocks, viewing them as a safe haven amid geopolitical tensions and economic uncertainty in other regions [6] - This trend is contributing to capital inflows into Nasdaq-tracking ETFs like QQQ and QQQM [6] ETF Highlights - Invesco QQQ (QQQ) has an AUM of $357.1 billion and an average daily volume of 44 million shares, charging 20 bps in annual fees [7] - Invesco NASDAQ 100 ETF (QQQM) has lower annual fees of 15 bps and an AUM of $55.1 billion, with a focus on the top three firms [9] - First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW) has an AUM of $1.9 billion and charges 55 bps in annual fees [10] - Invesco NASDAQ Next Gen 100 ETF (QQQJ) holds 111 securities with an AUM of $629.1 million and charges 15 bps in annual fees [11] - Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE) has an AUM of $1.2 billion and charges 35 bps in annual fees [12] Conclusion - The momentum of the Nasdaq is likely to be tested with major earnings reports from tech companies, but the current sentiment remains bullish [13]