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June was an impressive month for Wall Street. The three major indexes posted decent gains. The S&P 500 added about 4% return, the Nasdaq advanced more than 4% and the Dow Jones moved up 1.9%. While the Fed rate hike worries (despite a pause in June) bothered the market momentum in the middle of the month, easing inflation again charged up Wall Street to close out June.
The Personal Consumption Expenditures (PCE) index advanced 3.8% versus April's 4.3%. Excluding volatile food and energy, the core PCE index gained 0.3%, down from 0.4% in the previous month. The consumer price inflation in the United States fell to 4% in May 2023, the lowest since March 2021 and slightly below market expectations of 4.1%, helped by a decline in energy prices. Many market participants, hence, started to believe that the monetary tightening cycle is nearing its end.
In any case, the month witnessed upbeat economic indicators in the field of jobs, inflation, retail and housing. The U.S. economy grew at a 2% annualized pace in the first quarter, according to a final revision. That was way higher than the previous estimate of 1.3% and the 1.4% Dow Jones consensus forecast.
There were also some significant developments in individual stocks. Apple reached a $3-trillion market valuation for the first time since January 2022???. Despite these positive developments, some concerns remain. Traders were pricing in an 84.3% chance that the Fed would hike rates by 25 basis points to 5.25-5.50% in its July meeting???. Against this backdrop, below we highlight a few top-performing ETF areas of the month.
ETF Areas in Focus
Nigeria
Global X MSCI Nigeria ETF – Up 29%
Nigeria stocks soared to a 15-year high due to the ousting of central bank governor Godwin Emefiele. Investors betting on a currency devaluation sent the main index of the Nigerian Exchange soaring, per Bloomberg.
Defiance Hotel, Airline, and Cruise ETF (CRUZ - Free Report) ) – Up 13.4%
After the Covid-19 pandemic froze the travel industry, the summer of 2023 warmed up the travel sector especially due to the ebbing pandemic and the return of seasonality. It marks a significant improvement over an already buoyant Summer of 2022, as more Americans are increasingly set to take a leisure vacation this year.
The reason behind this is probably “revenge travel,” a term emanating from the prolonged periods of lockdown and the global response to the pandemic, signifying a strong desire to travel as means of combating the monotony and exhaustion of life in lockdown (read: Play "Revenge Travel" with These ETFs).
Homebuilding
iShares U.S. Home Construction ETF (ITB - Free Report) ) – Up 14.5%
Homebuilder sentiment has improved considerably. A dearth of existing homes for sale is propelling homebuilders into the limelight despite prevailing market challenges. This trend, as NAHB’s chief economist Robert Dietz suggests, is likely to persist as potential buyers continue to scout for new constructions due to limited available housing inventory. New home listing also marked a significant rise. Plus, chances of a less-hawkish Fed in the future should bode well for the sector.
Mortgage Real Estate
iShares Mortgage Real Estate ETF (REM - Free Report) – Up 13.1%
VanEck Mortgage REIT Income ETF (MORT - Free Report) – Up 12.7%
mREITs are investments in purchased or originated mortgages and mortgage-backed securities (MBS) that earn income from the interest paid on those assets. As small banks fell into difficulties, many will stay away from commercial real estate loans. That can create opportunities for mortgage trusts that invest in such loans.
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Top-Performing ETF Areas of June
June was an impressive month for Wall Street. The three major indexes posted decent gains. The S&P 500 added about 4% return, the Nasdaq advanced more than 4% and the Dow Jones moved up 1.9%. While the Fed rate hike worries (despite a pause in June) bothered the market momentum in the middle of the month, easing inflation again charged up Wall Street to close out June.
The Personal Consumption Expenditures (PCE) index advanced 3.8% versus April's 4.3%. Excluding volatile food and energy, the core PCE index gained 0.3%, down from 0.4% in the previous month. The consumer price inflation in the United States fell to 4% in May 2023, the lowest since March 2021 and slightly below market expectations of 4.1%, helped by a decline in energy prices. Many market participants, hence, started to believe that the monetary tightening cycle is nearing its end.
In any case, the month witnessed upbeat economic indicators in the field of jobs, inflation, retail and housing. The U.S. economy grew at a 2% annualized pace in the first quarter, according to a final revision. That was way higher than the previous estimate of 1.3% and the 1.4% Dow Jones consensus forecast.
There were also some significant developments in individual stocks. Apple reached a $3-trillion market valuation for the first time since January 2022???. Despite these positive developments, some concerns remain. Traders were pricing in an 84.3% chance that the Fed would hike rates by 25 basis points to 5.25-5.50% in its July meeting???. Against this backdrop, below we highlight a few top-performing ETF areas of the month.
ETF Areas in Focus
Nigeria
Global X MSCI Nigeria ETF – Up 29%
Nigeria stocks soared to a 15-year high due to the ousting of central bank governor Godwin Emefiele. Investors betting on a currency devaluation sent the main index of the Nigerian Exchange soaring, per Bloomberg.
Overseas investors watched with all hopes as Nigeria’s new president, Bola Tinubu, gave his inaugural speech in Abuja’s Eagle Square last month. The new president’s message on the repatriation of dividends and profits boosted the stock market momentum (read: 5 Country ETFs Beating the S&P 500 in Q2).
Transportation & Airlines
U.S. Global Jets ETF (JETS - Free Report) ) – Up 15.9%
SPDR S&P Transportation ETF (XTN - Free Report) ) – Up 14.8%
Defiance Hotel, Airline, and Cruise ETF (CRUZ - Free Report) ) – Up 13.4%
After the Covid-19 pandemic froze the travel industry, the summer of 2023 warmed up the travel sector especially due to the ebbing pandemic and the return of seasonality. It marks a significant improvement over an already buoyant Summer of 2022, as more Americans are increasingly set to take a leisure vacation this year.
The reason behind this is probably “revenge travel,” a term emanating from the prolonged periods of lockdown and the global response to the pandemic, signifying a strong desire to travel as means of combating the monotony and exhaustion of life in lockdown (read: Play "Revenge Travel" with These ETFs).
Homebuilding
iShares U.S. Home Construction ETF (ITB - Free Report) ) – Up 14.5%
SPDR S&P Homebuilders ETF (XHB - Free Report) ) – Up 13.9%
Homebuilder sentiment has improved considerably. A dearth of existing homes for sale is propelling homebuilders into the limelight despite prevailing market challenges. This trend, as NAHB’s chief economist Robert Dietz suggests, is likely to persist as potential buyers continue to scout for new constructions due to limited available housing inventory. New home listing also marked a significant rise. Plus, chances of a less-hawkish Fed in the future should bode well for the sector.
Mortgage Real Estate
iShares Mortgage Real Estate ETF (REM - Free Report) – Up 13.1%
VanEck Mortgage REIT Income ETF (MORT - Free Report) – Up 12.7%
mREITs are investments in purchased or originated mortgages and mortgage-backed securities (MBS) that earn income from the interest paid on those assets. As small banks fell into difficulties, many will stay away from commercial real estate loans. That can create opportunities for mortgage trusts that invest in such loans.