October 2020 saw some solid stock market gyrations. The month is traditionally the most volatile, as the VIX, an index that measures investors’ fear, tends to top in it, according to Macro Risk Advisors, as quoted on CNBC.

This October was no different with stocks seesawing on election uncertainty. Failed stimulus talks, subdued tech earnings and rising coronavirus cases on the global front also added to Wall Street’s woes. The S&P 500, the Dow Jones and the Nasdaq composite lost about 3.3%, 4.7% and 3.7%, respectively, in the month.

Let's take a look at the top ETF stories of October.

Stimulus Talks Called off Until After Election

Failing to reach a stimulus deal after hard negotiations between Republicans and Democrats,President Donald Trump stalled virus-related relief talks until after the election. Per the latest development, “Democrats have proposed spending $2.2 trillion. The Trump administration has called that “unserious,” but raised the offer to close to $1.6 trillion, including a $400 weekly pandemic jobless benefit. Democrats want $600 a week,” per Reuters.

Investors should note that Democrats and the White House have apparently agreed on a slew of relief provisions, “including another $1,200 direct payment to most Americans, funds for a second round of small business loans, money for schools and $25 billion to help cover airline payrolls as companies plan tens of thousands of furloughs,” per a CNBC article. This means that no matter who wins the election, some areas will likely get the relief package for sure.

The agenda puts focus on ETFs like U.S. Global Jets ETF (JETS Quick QuoteJETS - Free Report) , Consumer Staples Select Sector SPDR Fund (XLP) and iShares Russell 2000 ETF (IWM) (read:ETFs to Gain Despite Stalled Stimulus Talks).

Banks: Top Sector of October

Yield curve steepened in October. Still-strong stimulus hopes despite President Trump’s announcement of a halt in stimulus talks led to the rise in long-term bond yields. The benchmark U.S. treasury yields gained 20 bps to 0.88% in October while two-year treasury yields hovered in the range of 0.13% to 0.18%.

As banks seek to borrow money at short-term rates and lend at long-term rates, a steepening yield curve will earn more on lending and pay less on deposits. This will expand net margins and increase banks’ profits. As a result, First Trust Nasdaq Community Bank ETF (QABA), Invesco KBW Regional Banking ETF (KBWR) and SPDR S&P Regional Banking ETF (KRE Quick QuoteKRE - Free Report) added about 14% to 15%.

Rising Coronavirus Cases Globally

The resurgence in coronavirus cases in the United States and Europe kept markets edgy in the latter part of October. Many countries like Germany, France and the United Kingdom launched restriction measures or lockdowns in October.

Solid M&A in Semiconductor Space

The semiconductor space is buzzing with mergers and acquisitions. Chip producer Xilinx added 17% on Oct 9 on talks that Advanced Micro Devices (AMD) may buy the former for more than $30 billion. The official announcement was made on Oct 27. Then, Marvell Technology (MRVL) announced in late October its decision to acquire Inphi (IPHI) for $10 billion in a cash-and-stock deal (read: ETFs to Gain as Marvell's Inphi Buyout Creates $40B Giant).

iShares PHLX Semiconductor ETF (SOXX Quick QuoteSOXX - Free Report) , First Trust Nasdaq Semiconductor ETF (FTXL) and VanEck Vectors Semiconductor ETF (SMH) are the likes that gained from the deal.

Shale Mergers: Another Area to Look At

Pioneer Natural Resources Company (PXD), one of the largest independent shale operators, announced on Oct 20 a low-premium $4.5 billion buyout of Parsley Energy Inc. (PE). Plus, in October, ConocoPhillips (COP) announced that it will purchase Permian-focused shale oil driller Concho Resources (CXO) for $9.7 billion. iShares U.S. Oil & Gas Exploration & Production ETF (IEO Quick QuoteIEO - Free Report) is an ETF with considerable weight in the above-mentioned companies, making it a beneficiary of the shale mergers.

Digital Currency Concept Gaining Momentum

As soon as the COVID-19 hit the globe, social distancing mandates and fears that notes may be carriers of the virus made the concept of digital currency popular.On Oct 21, PayPal Holdings Inc (PYPL Quick QuotePYPL - Free Report) announced that it will allow customers to hold bitcoin and other virtual coins in its online wallet and shop using cryptocurrencies at merchants on its network. Apart from PayPal, companies like Microsoft, AT&T, Dish Network, Burger King, Domino’s Pizza, Goldman Sachs, Intuit also accept bitcoin.  

Several central banks are considering the rollout of CBDCs lately. The European Central Bank (ECB) is mulling over the rollout of a "digital euro" for the 19-nation currency club. China's recent experimental $1.5 million (1.16 million pounds) giveaway of digital yuan to Shenzhen citizens received kudos from currency analysts.Sweden’s Central Bank, Riksbank is also conducting a pilot project with Accenture to prepare e-krona.

Since investors cannot lay their hands on a digital currency ETF now, they can definitely familiarize with the concept through blockchain ETFs like Reality Shares Nasdaq NexGen Economy ETF (BLCN Quick QuoteBLCN - Free Report) , Amplify Transformational Data Sharing ETF (BLOK) and First Trust Indxx Innovative Transaction & Process ETF (LEGR).

Q3 Tech Earnings Subdue Investors’ Mood

The tech-heavy Nasdaq 100 lost 2.5% on Oct 29 as Q3 earningsof the Big Tech companies hurt investors’ sentiments. Although most of the reported third-quarter results beat expectations, shares took a beating due to underperformance in factors like non-financial metrics or guidance. Technology Select Sector SPDR Fund (XLK Quick QuoteXLK - Free Report) lost about 2.2% on Oct 30 (read: Trick or Treat Ahead for Tech ETFs After Earnings Subdue Mood?).

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