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Wall Street was downbeat, with the S&P 500, the Dow Jones, the Nasdaq Composite and the Russell 2000 losing about 2.7%, 3%, 3.3% and 2.9%, respectively, last week, due to rising rate worries. A round of upbeat economic data points indicated a longer-than-expected Fed rate hike plan. However, the Fed minutes infused some optimism once again as almost all officials supported a slower pace of interest rate increases.
Fed Minutes in Focus
Per the minutes, the interest rates will continue moving higher amid the ongoing inflation concerns but at a slower pace, which the Fed officials think is the best way to manage the risks of raising rates. At the same time, they were also concerned about stopping or slowing their inflation-fighting campaign too soon. The central bank raised interest rates by 25 bps last month after hiking 475 bps last year in the fastest hike since the 1980s.
PCE Price Index Data in Focus
Meanwhile, the Fed's preferred inflation measure increased last month at its fastest clip since June, an ominous sign that price pressures remain deep-rooted in the U.S. economy and could lead the Fed to further interest rate hikes well into this year. Consumer prices rose 0.6% sequentially in January, up sharply from a 0.2% sequential increase in December. On a year-over-year basis, prices rose 5.4%, up from a 5.3% annual increase in December.
Uptick in U.S. Treasury Yields
The overall impact of upbeat data points and high inflation was the uptick in bond yields. The benchmark U.S. treasury yield was 3.82% at the start of the week, while it ended the week at 3.95%. The six-month U.S. treasury yield was 4.99% at the start of the week while it ended the week at 5.06%.
Key Earnings Mixed-to-Upbeat
Apart from economic events, earnings releases were mixed-to-upbeat last week. Chinese e-commerce giant Alibaba Group (BABA - Free Report) reported robust third-quarter fiscal 2023 before the opening bell on Feb 23, wherein it beat the Zacks Consensus Estimate for both earnings and revenues. Nvidia (NVDA - Free Report) cheered investors with its solid fourth-quarter fiscal 2023 results, wherein it topped both earnings and revenue estimates. It also offered a bullish revenue outlook for the current quarter.
Walmart (WMT - Free Report) reported fourth-quarter fiscal 2023 results, wherein it surpassed both earnings and revenue estimates but issued a weaker-than-expected outlook for the full year. Deere & Co (DE - Free Report) reported robust first-quarter fiscal 2023 results, beating estimates on both the top and bottom lines. The company offered a bullish outlook for the fiscal year.
Oil Prices Remain Almost Unchanged
Oil prices remained almost unchanged last week as global growth slowdown fears strengthened on cues of central banks’ further policy tightening. The data released last week showed another solid rise in U.S. crude oil inventories. However, Russia’s plans to cut oil exports from its western ports by up to 25% in March, exceeding its announced production cuts of 500,000 barrels per day, offered some support to crude prices.
Against this backdrop, below, we highlight a few winning ETFs of last week.
ETFs in Focus
KS Global Carbon Offset Strategy ETF – Up 32.8%
This ETF is active and does not track a benchmark. The KraneShares Global Carbon Offset Strategy ETF provides broad coverage of the voluntary carbon market by tracking carbon offset futures contracts. The rise of de-carbonization has made the strategy a winner.
The Breakwave Dry Bulk Shipping ETF seeks to provide investors with exposure to the daily change in the price of dry bulk freight futures, before expenses and liabilities.
Russia’s invasion of Ukraine boosted crude prices to 14-year highs. Apart from energy companies, oil tankers benefited from the trend too. As new sanctions have shifted the flow of Russian oil to more distant ports, one analyst thinks the rally in shipping stocks could keep going, as quoted on barrons.com.
Noble Absolute Return ETF – Up 7.3%
The Noble Absolute Return ETF seeks capital appreciation across a full market cycle. The fund charges 98 bps in fees. The fund takes long positions in best securities with improving circumstances and short positions in best securities with worsening scenarios. SPDR SER TR BLOOMBERG 1-3 MO takes about 62.7% of the fund, while cash takes about 150%.
Simplify Tail Risk Strategy ETF – Up 6.5%
Simplify Tail Risk Strategy ETF seeks to provide income and capital appreciation while protecting against significant downside risk to investors by hedging diversified portfolios against severe equity market selloffs. The fund deploys advanced options strategies that are designed to handle multiple types of market dislocations. The fund charges 84 bps in fees and yields 3.42% annually.
The AdvisorShares Ranger Equity Bear ETF seeks capital appreciation through short sales of domestically traded equity securities. HDGE implements a fundamental, research-driven security selection process based on forensic accounting techniques that short sell U.S. listed equities. HDGE looks to identify securities with low earnings quality or aggressive accounting designed to bolster short-term corporate performance and may exhibit above-average downside volatility.
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Best-Performing ETFs of Last Week
Wall Street was downbeat, with the S&P 500, the Dow Jones, the Nasdaq Composite and the Russell 2000 losing about 2.7%, 3%, 3.3% and 2.9%, respectively, last week, due to rising rate worries. A round of upbeat economic data points indicated a longer-than-expected Fed rate hike plan. However, the Fed minutes infused some optimism once again as almost all officials supported a slower pace of interest rate increases.
Fed Minutes in Focus
Per the minutes, the interest rates will continue moving higher amid the ongoing inflation concerns but at a slower pace, which the Fed officials think is the best way to manage the risks of raising rates. At the same time, they were also concerned about stopping or slowing their inflation-fighting campaign too soon. The central bank raised interest rates by 25 bps last month after hiking 475 bps last year in the fastest hike since the 1980s.
PCE Price Index Data in Focus
Meanwhile, the Fed's preferred inflation measure increased last month at its fastest clip since June, an ominous sign that price pressures remain deep-rooted in the U.S. economy and could lead the Fed to further interest rate hikes well into this year. Consumer prices rose 0.6% sequentially in January, up sharply from a 0.2% sequential increase in December. On a year-over-year basis, prices rose 5.4%, up from a 5.3% annual increase in December.
Uptick in U.S. Treasury Yields
The overall impact of upbeat data points and high inflation was the uptick in bond yields. The benchmark U.S. treasury yield was 3.82% at the start of the week, while it ended the week at 3.95%. The six-month U.S. treasury yield was 4.99% at the start of the week while it ended the week at 5.06%.
Key Earnings Mixed-to-Upbeat
Apart from economic events, earnings releases were mixed-to-upbeat last week. Chinese e-commerce giant Alibaba Group (BABA - Free Report) reported robust third-quarter fiscal 2023 before the opening bell on Feb 23, wherein it beat the Zacks Consensus Estimate for both earnings and revenues. Nvidia (NVDA - Free Report) cheered investors with its solid fourth-quarter fiscal 2023 results, wherein it topped both earnings and revenue estimates. It also offered a bullish revenue outlook for the current quarter.
Walmart (WMT - Free Report) reported fourth-quarter fiscal 2023 results, wherein it surpassed both earnings and revenue estimates but issued a weaker-than-expected outlook for the full year. Deere & Co (DE - Free Report) reported robust first-quarter fiscal 2023 results, beating estimates on both the top and bottom lines. The company offered a bullish outlook for the fiscal year.
Oil Prices Remain Almost Unchanged
Oil prices remained almost unchanged last week as global growth slowdown fears strengthened on cues of central banks’ further policy tightening. The data released last week showed another solid rise in U.S. crude oil inventories. However, Russia’s plans to cut oil exports from its western ports by up to 25% in March, exceeding its announced production cuts of 500,000 barrels per day, offered some support to crude prices.
Against this backdrop, below, we highlight a few winning ETFs of last week.
ETFs in Focus
KS Global Carbon Offset Strategy ETF – Up 32.8%
This ETF is active and does not track a benchmark. The KraneShares Global Carbon Offset Strategy ETF provides broad coverage of the voluntary carbon market by tracking carbon offset futures contracts. The rise of de-carbonization has made the strategy a winner.
Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) – Up 17.8%
The Breakwave Dry Bulk Shipping ETF seeks to provide investors with exposure to the daily change in the price of dry bulk freight futures, before expenses and liabilities.
Russia’s invasion of Ukraine boosted crude prices to 14-year highs. Apart from energy companies, oil tankers benefited from the trend too. As new sanctions have shifted the flow of Russian oil to more distant ports, one analyst thinks the rally in shipping stocks could keep going, as quoted on barrons.com.
Noble Absolute Return ETF – Up 7.3%
The Noble Absolute Return ETF seeks capital appreciation across a full market cycle. The fund charges 98 bps in fees. The fund takes long positions in best securities with improving circumstances and short positions in best securities with worsening scenarios. SPDR SER TR BLOOMBERG 1-3 MO takes about 62.7% of the fund, while cash takes about 150%.
Simplify Tail Risk Strategy ETF – Up 6.5%
Simplify Tail Risk Strategy ETF seeks to provide income and capital appreciation while protecting against significant downside risk to investors by hedging diversified portfolios against severe equity market selloffs. The fund deploys advanced options strategies that are designed to handle multiple types of market dislocations. The fund charges 84 bps in fees and yields 3.42% annually.
Active Bear ETF (HDGE - Free Report) – Up 4.2%
The AdvisorShares Ranger Equity Bear ETF seeks capital appreciation through short sales of domestically traded equity securities. HDGE implements a fundamental, research-driven security selection process based on forensic accounting techniques that short sell U.S. listed equities. HDGE looks to identify securities with low earnings quality or aggressive accounting designed to bolster short-term corporate performance and may exhibit above-average downside volatility.