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Wall Street in Correction: 4 Sector ETFs Unscathed in February

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Bloodbath in Wall Street worsened on Feb 27 on news that California is monitoring at least 8,400 people for the coronavirus. About 33 people tested positive for COVID-19 in the state, causing a severe market crash.

Three key U.S. indexes like the S&P 500, the Dow Jones and the Nasdaq lost more than 4% on the day. U.S. stocks, in any case, have been exhibiting steep losses for six days in a row. Global stocks are bracing for the worst week since 2008, thanks to the virus scare.

In the past week (as of Feb 27, 2020), the key U.S. indexes lost more than 11% and entered into the correction territory. The S&P 500 witnessed the fastest correction in history. The Dow Jones fell 1,190.95 points on Feb 27 — its worst single-day slump in history.

Global markets lost $1.83 trillion on Feb 27, with the U.S. markets shedding $1.33 trillion, S&P Dow Jones’ Howard Silverblatt said in an email. Over the past six days, global markets wiped out $6 trillion, with U.S. markets losing $4 trillion.

Bank of America commented that the global economy is on its way for its weakest year since the 2008 financial crisis due to increased  lockdowns, restrictions on global travel and lower manufacturing activity in China. Earlier, Goldman Sachs slashed its outlook for U.S. companies’ earnings growth to zero.

The S&P 500, the Dow Jones and the Nasdaq lost about 9.3%, 10.7% and 7.9% in the past month. Against this backdrop, we highlight a few sector ETFs that stayed steady (gained or lost little) in the coronavirus-infected February.

Clean Energy

Upbeat earnings from Enphase Energy Inc. (ENPH - Free Report) and SolarEdge Technologies Inc. (SEDG - Free Report) and Tesla’s (TSLA - Free Report) optimistic solar plan boosted Invesco Solar ETF (TAN - Free Report) . The fund has gained 14.3% in the past month.  SPDR Kensho Clean Power ETF (CNRG - Free Report) has added 4.9% in the past month (read: Can Solar ETF Retain its Rally Despite Mixed Earnings?).

Investors should note that a transition toward 100% clean electricity is in process in the United States. China is a major player building a green environment. Almost half of the European Union’s (EU) 28 member states have already reached or are about to touch their 2020 renewable energy targets. All these explain a rally in clean energy ETFs (read: 5 ETF Areas Up At Least 45% in 2019).

Online Retail

Online retailing is, in any case, an emerging thing. The coronavirus scare probably favored the industry as any kind of lockdown boosts demand for online shopping, be it groceries or some other essentials. Chinese online retailer JD.com reported that its online grocery sales grew 215% year over year during a 10-day period between late January and early February. No wonder, ProShares Long Online/Short Stores ETF (CLIX - Free Report) has added 3.7% in the past month.

Gold Miners

Gold is gaining currently on the safe-haven status. The coronavirus impact seems to be more pronounced than estimated. As a result, gold prices approached a seven-year high. Last week, gold touched $1600 for the first time since 2013. Bullion ETF SPDR Gold Shares (GLD - Free Report) has added 3.4% in the past month (read: Gold to Hit $2000 Soon? ETFs to Bet On).

Apart from coronavirus, easing central bank polices and rising expected volatility for 2020 U.S. presidential election has been aiding gold prices. No wonder, mining stocks, which act as leveraged plays of the underlying metal, have also gained.  No wonder, Sprott Gold Miners ETF (SGDM - Free Report) has lost only 1.7% in the past month. Still, in the current volatile market, an investor should stick to the bullion itself and limit exposure to mining equities.

Healthcare

It is needless to say, such a virus attack will boost demand for vaccines, medicines and equipment. The disease will likely give more business to healthcare providers as well. As a result,China healthcare fund KraneShares MSCI All China Health Care Index ETF (KURE - Free Report) has gained 9.6% past month. iShares Genomics Immunology and Healthcare ETF (IDNA - Free Report) was up 1.5% over the same time frame (read: Will Biotech ETFs Excel in Election Year Post a Surge in 2019?).

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