ETF Trading Report: Growth and Banking ETFs In Focus

U.S. stocks rebounded nicely from Tuesday’s slump as all the major benchmarks finished the day in the green. The Dow and the S&P 500 both added about 0.7% while the Nasdaq gained 0.8% in comparison.

Bulls were buoyed by falling bond yields in Spain and Italy while Alcoa’s earnings report also added to the optimism. The Dow component saw earnings of nine cents a share in the first quarter, beating the Zacks Consensus Estimate of a four cent loss per share.

This quality report, along with the relatively optimistic outlook, helped to boost stock prices in Wednesday trading and led many to believe that this upcoming earnings season might be a good one (also read ETFs vs. ETNs: What’s The Difference?).

Outside of equities, currencies and bonds were more mixed on the session as the U.S. dollar index finished the day slightly lower, coming in at $79.76 to finish the session. Thanks to this and the bullish attitude in the market, investors did see the Ten Year yield rise back above the 2% mark, ending at the 2.04% level.

In commodities, the day was generally positive as crude oil led the way with a 1.55% gain in the session while RBOB gas also gained 1.2%. Additionally, many soft commodities finished in the green while livestock was a particularly strong performer as cattle—both live and cattle feeder—gained roughly 1.5% in the mid-week session.

In terms of ETF trading, many of the nation’s most popular products had average trading days with some of the most widely traded funds seeing very mediocre volume levels. Nonetheless, there were several outliers, namely in the sector, emerging market, and growth ETF segments which saw huge trading levels.

Of particular interest should be the massive volume investors saw in the Market Vectors Bank and Brokerage ETF ( RKH - ETF report ) . This ETF saw volume of over 700,000 shares in Wednesday’s session, crushing the average daily volume of just 36,000 shares (see Three Financial ETFs Outperforming XLF).

This massive shift was likely due to the performance of the banking sector and speculation over financial industry earnings. Many of the nation’s biggest banks added more than 2% on the day—including a 3.75% jump for ( BAC - Analyst Report ) and a 2.4% move for ( JPM - Analyst Report ) —while earnings season for these behemoths is fast approaching.

Given that this banking ETF added about 1.8% on the day, it is safe to assume that many investors are betting on the bullish sentiment to continue for this section of the financial world during earnings season which is approaching later this week with JP Morgan and Wells Fargo.

Meanwhile, growth ETFs again saw outsized trading volumes in today’s session, although the results were a little more bullish this time around. iShares Morningstar Large Growth ETF ( JKE - ETF report ) and iShares Russell 3000 Growth ETF ( IWZ - ETF report ) both saw volumes more than three times their normal levels while both growth ETFs added more than 0.6% on the day (read Frontier Market ETF Investing 101).

Interestingly, both growth ETFs have a heavy focus on technology stocks so today’s strong performance in the tech sector may have helped boost these funds to unusually strong trading days in Wednesday’s session, along with other investors getting in ahead of earnings season.

See more on ETFs in the Zacks ETF Research Center.