February was pretty volatile for Wall Street. Though the start of the month was upbeat, rising rate worries triggered a crash at month-end. Growing vaccine distribution and hopes of hefty stimulus under the Biden presidency along with a dovish Fed stoked inflationary pressure and boosted long-term treasury yields. Still, the S&P 500 (up 2.61%), the Dow Jones (up 3.17%), the Nasdaq Composite (up 0.93%) and the small-cap Russell 2000 (up 6.14%) managed to remain in the green.
The tech-heavy Nasdaq was the worst performer among the big three as the bunch of stocks that won during the pandemic-ridden 2020 on low rates and rising rates are now wreaking havoc on the segment. U.S. benchmark Treasury yields started the month with 1.09% and ended the month at 1.44%, having
hit a high of 1.60% (the maximum in a year) in the final week of the month. Both stocks and bonds saw selloffs in late-February.
The markets entered the month of March with this backdrop. Hence, it is worth figuring out which ETF events of February would prevail in March so that investors can prepare accordingly.
FDA’s EUA to J&J Vaccine in February: March to See Vaccine Optimism
On Feb 27, the United States sanctioned Johnson & Johnson's (
JNJ Quick Quote JNJ - Free Report) COVID-19 vaccine for emergency use, giving the nation a third shot at fighting the outbreak after BioNTech/Pfizer and Moderna. Trials in the United States showed that the vaccine was 86% effective while those in South Africa, “where the more transmissible 501.V2 variant of the disease is prevalent, showed 82% effectiveness” (read: How to Trade USFDA's EUA to J&J Vaccine With ETFs).
This is the first single-shot vaccine that has been authorized in the United States. One can expect solid vaccine rally ahead, thanks to this EUA. Hopes of proper economic reopening and a considerable rebound in global growth will strengthen now, resulting in a rally in leisure and transportation ETFs like
U.S. Global Jets ETF ( JETS Quick Quote JETS - Free Report) (up 22.1% past month) and Invesco Dynamic Leisure and Entertainment ETF ( PEJ Quick Quote PEJ - Free Report) (up 15.6%). House Democrats Pass Biden’s $1.9 TN Stimulus Package
At February-end, House Democrats passed their $1.9-trillion coronavirus aid package. The relief package will now be discussed in the Senate, where Democrats are expected to amend it next week and return it to the House for approval
before unemployment insurance benefits expire on Mar 14. Such optimism will likely boost treasury yields further and hurt bond ETFs. iShares 20+ Year Treasury Bond ETF ( TLT Quick Quote TLT - Free Report) could be a losing proposition in this regard. Energy a Winner in February
Oil prices have been on the rise lately on a cold blast in the United States. A cold snap shut wells and refineries in Texas, the biggest crude producing state in the United States in February. The space is, however, gradually returning to normalcy.
Stimulus and vaccine hopes as well as a higher expected growth rate boosted hopes of a rebound in crude production in the United States, which in turn has benefited oil companies. Energy ETFs like
Oil Services Vaneck ETF ( OIH Quick Quote OIH - Free Report) and Unconventional Oil & Gas Vaneck ETF ( FRAK Quick Quote FRAK - Free Report) gained about 22.7% and 24.7% in the past month and will likely maintain the momentum. After a Stellar February, Will Blockchain Rally Continue?
Blockchain stocks and ETFs have been soaring lately on bitcoin strength. The blockchain technology in bitcoin
keeps track of the balances for all users and updates them on each transaction. The cryptocurrency bitcoin is going through the roof this year, having crossed the $58,000 mark lately on growing mainstream acceptance.
The EV giant Tesla’s (TSLA) latest investment of $1.5 billion in bitcoin has mainly charged up the space. Tesla also plans to accept it as payment. Moreover, BitPay – a bitcoin and cryptocurrency payment provider – has of late announced that it is now
effective for Apple Wallet. There were supportive comments from Ark Investment Management’s Cathie Wood and Square’s (SQ) purchase of bitcoin. Blackrock (BLK) also started investing in bitcoin.
These positive updates boosted blockchain ETFs like
Amplify Transformational Data Sharing ETF ( BLOK Quick Quote BLOK - Free Report) and Reality Shares Nasdaq NexGen Economy ETF (BLCN) last month. We expect to see the momentum in March as well (read: Why Blockchain ETFs Are Soaring). Will the Marijuana Flavor Stay Strong in March?
After making the world's largest video game retailer —
GameStop (GME) – a red-hot stock, Reddit’s discussion popularized marijuana stocks in early February. The pending merger between Tilray and Aphria was supposedly the main driver of the promotion that time (read: Marijuana ETFs on a High on Reddit Frenzy).
In any case, cannabis companies have received a boost from the Democratic Party’s intentions to legalize the plant at the federal level. With Biden’s stimulus proposal passing the House seamlessly, we expect other Democratic agendas to see smooth success in the coming days. So,
Amplify Seymour Cannabis ETF (CNBS) should be under watch in March. After a Solid Feb, Value Stocks Are Likely Winning Bets of March Too
Value stocks have been on a tear in 2021, with
SPDR Portfolio S&P 500 Value ETF ( SPYV Quick Quote SPYV - Free Report) gaining 8.2%,outstripping SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 2.6% riseand the S&P 500’s 5.1% growth. Economic reopening has been driving this rally. We expect this momentum for value to continue in March. Want key ETF info delivered straight to your inbox?
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