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September Turns Sour: Top ETF Areas of Last Week

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Wall Street ended on a negative note last week just the week before that, strengthening the worth of the adage that September is historically the worst month of the year for stocks. The S&P 500, the Dow Jones and the Nasdaq Composite lost about 0.6%, 0.07% and 0.5%, respectively. The S&P 500 is on its way toward its first monthly decline since January. The Russell 2000 only added 0.42% last week.

Consumer sentiment missed estimates in early September and hovered near a decade-low as concerns over inflation lingered. Notably, September has an ill reputation for the stock market. According to moneychimp.com, a consensus carried out from 1950 to 2020 has revealed that September ended up offering positive returns in 32 years and negative returns in 39 years, with an average return of negative 0.62%, which is worse than any other month.

However, last week was not extremely downbeat on every ground as the oil sector surged and retail sales bounced back. U.S. retail sales gained 0.7% sequentially in August 2021, following an upwardly revised 1.8% drop-off in July and breezing past market expectations of a 0.8% decline, as demand for goods remained strong despite the surge in the Delta variant cases of COVID-19. Back-to-school shopping and child tax credit payments from the government are deemed to be the drivers, per Reuters (read: August Retail Sales Shine: ETFs & Stocks to Win).

Oil prices also staged a rally aided by ahost of factors. Most recently, an industry data showed a larger-than-expected drawdown in U.S. crude stockpiles. Also, expectations of higher demand thanks to growing vaccine distribution along with a still-dovish Fed boosted hopes of higher oil consumption. Brent hit its highest levels since late July and WTI since early August, per CNBC (read: Sector ETFs to Benefit/Lose as Oil Crosses $70).

There was another big event last week. President Biden always had plans for tax hikes. In line with that plan, House Democrats drew a host of tax hikes on corporations and wealthy people to finance the costs associated with the social safety net and climate policy that could touch as much as $3.5 trillion (read: Tax Hike in the Cards? ETFs in Focus).

The plan demands top corporate and individual tax rates of 26.5% and 39.6%, respectively, according to a summary released by the tax-writing Ways and Means Committee, as quoted on CNBC. The proposal includes a 3% surcharge on individual income above $5 million and a capital gains tax of 25%.

Against this backdrop, below we highlight a few ETF areas that were the winning ones last week.

ETF Areas in Focus

Energy

Vaneck Unconventional Oil & Gas ETF – Up 5.89%

Natural Gas ETF First Trust (FCG - Free Report) – Up 5.86%

As discussed above, oil prices gained last week.“The impact of Hurricane Ida was a lot greater than many anticipated and production in the Gulf of Mexico region might struggle to return until Tropical Storm Nicholas is done punishing the region with torrential rain,” said Edward Moya, senior analyst at OANDA, as quoted on CNBC. Moreover, natural gas prices are heating up on supply crunch ahead of winter. Normally, Arctic Chills give life to this commodity every winter. The cold snap boosts electricity demand across the region, putting focus on natural gas.

Technology

Simplify Volt Cloud and Cybersecurity Disruption (VCLO - Free Report) – Up 4.60%

Simplify Volt Fintech Disruption ETF (VFIN - Free Report) – Up 2.87%

The rise of cloud computing and cybersecurity made the funds winners even in a down week. These products concentrate on those few disruptive companies that are poised to dominate the new era of cloud technology and then enhance the concentrated exposure with options. The ongoing pandemic and the resultant social distancing also favored the funds.

Cannabis

Advisorshares Pure US Cannabis ETF (MSOS - Free Report) – Up 4.29%

The fund provides exposure to exchange-listed companies that are active in the cannabis industry. The segment has been hot in Biden’s presidency. There is a rising bet that cannabis may be legalized federally in the Biden presidency.

Health Care

Alps Medical Breakthroughs ETF (SBIO - Free Report) – Up 3.64%

The vaccine boost gave a new lease of life to the biotech sector. This fund provides exposure to the companies with one or more drugs in phase II or phase III FDA clinical trials by tracking the S-Network Medical Breakthroughs Index.

Shipping

Sonicshares Global Shipping ETF (BOAT - Free Report) – Up 3.47%

 The pickup in global economic growth has supported the dry bulk shipping rates. Gradually rising demand across all vessel categories has mainly aided the area and the related fund. The Solactive Global Shipping Index consists of global shipping companies engaged in the maritime transportation of goods and raw materials, including consumer and industrial products, vehicles, dry bulk, crude oil and liquefied natural gas.