Best-Performing ETF Areas of Past Week
Wall Street was upbeat last week, with the S&P 500 adding 1.5%, the Dow Jones gaining 1.3% and the Nasdaq advancing 1.4%. A global gauge of stocks hit a record high last week as traders bet big on the expectations of the Federal Reserve’s first interest rate cut in more than four years. The MSCI All Country World Index is hovering around its peak close from Jul 16, hinting at growing confidence in an imminent interest rate cut by the Fed.
Federal Reserve Chair Jerome Powell's speech at the Jackson Hole economic symposium signaled a September rate cut, following revised payroll data and dovish Fed minutes. However, caution needs to be exercised. While French services showed robust growth, Germany's composite PMI suggested an economic slowdown. In Britain, private sector growth strengthened with easing price pressures.
The report for annual benchmark revisions from the Bureau of Labor Statistics last week showed that there were 818,000 fewer people employed as of this March than previously reported. The team at Capital Economics pointed out that this indicates average monthly job gains seen from March 2023 through March 2024 were closer to 174,000 rather than the 242,000 initially reported, according to Yahoo Finance (read: Why You Should Buy Dividend ETFs Now).
However, recessionary fears in the United States ebbed lately. Last Monday, Goldman Sachs analyst Jan Hatzius cut his earlier forecast for a U.S. recession over the next 12 months from 25% to 20%, citing improved economic data and a strong corporate earnings season, as quoted on Yahoo Finance (read: ETF Strategies to Play as Recession Fears Fade).
As of Aug 23, 2024, the benchmark U.S. treasury yield was 3.81% versus 3.86% recorded as of Aug 19. Such a drop in bond yields probably has boosted the broader stock market. Against this backdrop, we highlight a few winning inverse/leveraged ETFs of last week below.
Best-Performing ETFs in Focus
Cryptocurrency – First Trust SkyBridge Crypto Industry & Digital Economy ETF CRPT – Up 11.1%
Bitcoin price jumped 8% last week. Investors should note that Goldman Sachs and Morgan Stanley invested huge sums into spot bitcoin ETFs during the second quarter of 2024, according to regulatory filings, as quoted on Reuters. Together, the banks acquired over $600 million in these products, which began trading in January 2024. This piece of news has probably boosted investors’ confidence about this particular cryptocurrency (read: Should You Buy Bitcoin ETFs Following Goldman and Morgan Stanley?).
Homebuilders – SPDR S&P Homebuilders ETF XHB – Up 8.2%
Expectations that the Fed will start cutting interest rates at its next meeting in September have buoyed the housing market in recent weeks. As a result, this leveraged homebuilding ETFs gained lately (read: Time for Homebuilding ETFs?).
Uranium Miners – Sprott Junior Uranium Miners ETF URNJ – Up 11.8%
Kazatomprom, the world’s largest uranium producer, has cut its production target for 2025 due to project delays and sulphuric acid shortages, triggering supply concerns of the radioactive fuel vital for nuclear power, per Financial Times. The move will likely boost uranium prices in the coming days and benefits ETFs like URAX.
Consumer Cyclicals – Invesco Dorsey Wright Consumer Cyclicals Momentum ETF PEZ – Up 5.7%
The underlying Dorsey Wright Consumer Cyclicals Technical Leaders Index identifies companies that are showing relative strength and are composed of at least 30 common stocks from a universe of approximately 3,000 common stocks traded on US exchanges. Rate cut hopes have boosted this consumer ETF.
Biotech – Range Cancer Therapeutics ETF CNCR – Up 5.4%
The underlying Range Cancer Therapeutics Index tracks the performance of a portfolio of U.S. exchange-listed pharmaceutical or biotechnology stocks or American Depositary Receipts with a market capitalization of more than $250 million. A low-rate environment is a plus for the high-growth sectors like biotech.
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