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Wall Street was downbeat last week. The S&P 500 (down 2.1%), the Dow Jones (down 1.7%), the Nasdaq Composite (down 2.7%) and the Russell 2000 (down 1.9%) — all lost last week. Amid major developments last week, the Fed’s rate hike deserves mention.
As expected, the Federal Reserve boosted its benchmark interest rate by 50 basis points last week. Fed Chair Jerome Powell reiterated the central bank's commitment to hike rates further in order to tame multi-decade highs in inflation. The latest rate hike took the benchmark rate to the range of 4.25% to 4.5%, its highest level in 15 years. However, the latest hike was lower than its previous four three-quarter-point hikes.
The policymakers also forecast that their key short-term rate will reach 5% to 5.25% by the end of 2023, before being slashed to 4.1% in 2024. That suggests that the Fed is prepared to hike its benchmark rate by additional three-quarters of a point and then stay put until the end of 2023. This is quite expected as U.S. inflation is showing signs of peaking. In fact, the consumer price index (CPI) for November slowed to a one-year low.
Inflation in the United States is cooling down gradually, underscoring that the worst of inflation has likely passed. CPI jumped 7.1% year over year in November, down from a 7.7% year-over-year increase in October and a recent peak of 9.1% in June. This represents the lowest annual increase since late 2021 (read: ETFs to Benefit as Inflation Drops to One-Year Low).
Meanwhile, natural gas spiked last week and will likely rise further on forecasts of colder-than-normal weather. The cold snap is expected to peak on Christmas in most parts of the United States. The gains in natural prices came despite Freeport LNG's announcement last week (read: Cold Wave Forecast Sparks Rally in Natural Gas ETFs).
Against this backdrop, below we highlight a few ETFs that gained the most last week.
ETFs in Focus
Noble Absolute Return ETF – Up 23.8%
This ETF is active and does not track a benchmark. The Noble Absolute Return ETF seeks capital appreciation across a full market cycle. The expense ratio of NOPE is 1.82%.
Direxion Shares ETF Trust Direxion Mrna ETF – Up 6.6%
The underlying BITA Messenger RNA Technology Index invests in U.S., Canadian and European companies that are leading the development of messenger RNA technology. The fund charges 65 bps in fees.
The underlying MVIS U.S. Listed Oil Services 25 Index tracks the overall performance of U.S.-listed companies involved in oil services to the upstream oil sector, which include oil equipment, oil services, or oil drilling. The fund charges 35 bps in fees.
iPatha.B Coffee Subindex TR ETN – Up 4.7%
The underlying Bloomberg Coffee Subindex Total Return reflects the returns that are potentially available through an unleveraged investment in the futures contracts on coffee. The note charges 45 bps in fees.
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Best-Performing ETFs of Last Week
Wall Street was downbeat last week. The S&P 500 (down 2.1%), the Dow Jones (down 1.7%), the Nasdaq Composite (down 2.7%) and the Russell 2000 (down 1.9%) — all lost last week. Amid major developments last week, the Fed’s rate hike deserves mention.
As expected, the Federal Reserve boosted its benchmark interest rate by 50 basis points last week. Fed Chair Jerome Powell reiterated the central bank's commitment to hike rates further in order to tame multi-decade highs in inflation. The latest rate hike took the benchmark rate to the range of 4.25% to 4.5%, its highest level in 15 years. However, the latest hike was lower than its previous four three-quarter-point hikes.
The policymakers also forecast that their key short-term rate will reach 5% to 5.25% by the end of 2023, before being slashed to 4.1% in 2024. That suggests that the Fed is prepared to hike its benchmark rate by additional three-quarters of a point and then stay put until the end of 2023. This is quite expected as U.S. inflation is showing signs of peaking. In fact, the consumer price index (CPI) for November slowed to a one-year low.
Inflation in the United States is cooling down gradually, underscoring that the worst of inflation has likely passed. CPI jumped 7.1% year over year in November, down from a 7.7% year-over-year increase in October and a recent peak of 9.1% in June. This represents the lowest annual increase since late 2021 (read: ETFs to Benefit as Inflation Drops to One-Year Low).
Meanwhile, natural gas spiked last week and will likely rise further on forecasts of colder-than-normal weather. The cold snap is expected to peak on Christmas in most parts of the United States. The gains in natural prices came despite Freeport LNG's announcement last week (read: Cold Wave Forecast Sparks Rally in Natural Gas ETFs).
Against this backdrop, below we highlight a few ETFs that gained the most last week.
ETFs in Focus
Noble Absolute Return ETF – Up 23.8%
This ETF is active and does not track a benchmark. The Noble Absolute Return ETF seeks capital appreciation across a full market cycle. The expense ratio of NOPE is 1.82%.
Direxion Shares ETF Trust Direxion Mrna ETF – Up 6.6%
The underlying BITA Messenger RNA Technology Index invests in U.S., Canadian and European companies that are leading the development of messenger RNA technology. The fund charges 65 bps in fees.
Vaneck Oil Services ETF (OIH - Free Report) – Up 5.6%
The underlying MVIS U.S. Listed Oil Services 25 Index tracks the overall performance of U.S.-listed companies involved in oil services to the upstream oil sector, which include oil equipment, oil services, or oil drilling. The fund charges 35 bps in fees.
iPatha.B Coffee Subindex TR ETN – Up 4.7%
The underlying Bloomberg Coffee Subindex Total Return reflects the returns that are potentially available through an unleveraged investment in the futures contracts on coffee. The note charges 45 bps in fees.