Why VOO stock is rising as US bond yields soar and AUM nears $1 trillion

The Vanguard S&P 500 Index (VOO) has jumped by over 7% this year, and is hovering at its all-time high. It has jumped by over 17% from its lowest level last year, while its inflows have jumped by over $58 billion this year. This article explores some of the top reasons the blue-chip S&P 500 Index ETF may continue soaring this year.

VOO ETF inflows are soaring despite rising bond yields

The Vanguard S&P 500 ETF is firing on all cylinders this year, with its inflows accelerating. Data shows that the fund has added assets in all but two weeks this year as it matches towards the $1 trillion asset mark.

The fund has had over $58 billion in inflows this year, a figure that will likely cross the $60 billion mark this year. It now holds over $960 billion in assets, meaning that it will likely cross the $1 trillion mark in June.

The index is seeing strong inflows even as the US economic growth slows and inflation jumps. Recent data showed that the headline Consumer Price Index (CPI) jumped to 3.8% in April, while the Producer Price Index (PPI) rose to 6%, its highest point in years.

Most importantly, the fund is attracting assets as US bond yields surge. Data shows that the ten-year yield has risen to 4.6%, while the 30-year has jumped to over 5.15%. This surge is mostly because of the higher inflation and the rising fear that the Federal Reserve will maintain a hawkish tone.

The most recent FOMC minutes showed that officials believe that a rate hike will be necessary if inflation remains at an elevated level. As such, with gasoline, fertilizer, and transportation costs rising, there is a risk that the bank may deliver at least one hike.

Corporate earnings and AI boom are boosting the S&P 500 Index

The VOO ETF stock price has jumped despite the rising bond yields because of the ongoing AI boom and strong corporate earnings. 

A good example of the AI boom is the latest NVIDIA earnings, which showed that its revenue jumped by 81% in the first quarter to $81 billion. It also expects that its second-quarter revenue will jump to over $91 billion, a figure that analysts believe is highly conservative.

Other companies in the S&P 500 Index have published strong results as well. For example, Target, a retailer that has always been under pressure, published its fastest sales growth in years on Wednesday. 

Altogether, the S&P 500 Index earnings growth in the last quarter rose to 27.7%, the fastest rate in over four years. Most of this growth is driven by AI companies like Intel, Micron, Sandisk, and Western Digital.

The VOO ETF stock price is also set to soar because Donald Trump will ultimately end the war in Iran. This will likely happen in the next few months as the US nears its midterm elections. 

VOO stock price technical analysis

VOO ETF stock chart | Source: TradingView

The daily chart shows that the VOO stock price has soared in the past few months, and this trend may continue in the foreseeable future. Most recently, it has formed a small morning star candlestick pattern, which is made up of a small body and small upper and lower wicks. 

The stock remains above all moving averages. Therefore, the stock will likely continue rising in the near term, with the next key psychological level to watch being at $700. It will eventually soar to $1,000 as catalysts rise.