Wall Street offered a moderate-to-downbeat performance last week with the S&P 500 (down 0.8%), the Dow Jones (down 1.24%), the Nasdaq (up 0.1%) and the Russell 2000 (down 0.5%) returning in the range of down 1.24% to up 0.1%.
Presently, Wall Street is preoccupied with the earnings season and has received varied corporate results. Though most companies exceeded the modest predictions of analysts, investors were left unsettled by the absence of forecasts from major companies.
Last week, the Federal Reserve raised its benchmark interest rate by 0.25% (as expected) on Wednesday, which pushed the policy rate to a range of 5-5.25%, the highest since September 2007. The Fed's move is part of its most aggressive rate-hiking campaign since the 1980s, as it tries to tackle elevated inflation rates.
However, in its statement, the central bank made it clear that it is still "highly attentive" to inflation risks, and future rate hikes will be dependent on the impact of previous hikes on the economy and financial developments (read:
Fed Hikes by 25 Bps to Above 5%: ETFs to Win/Lose).
Then there was the release of upbeat April jobs data. The report showed a substantial increase in nonfarm payrolls, with 253,000 new jobs added, surpassing
Wall Street estimates of 180,000. The unemployment rate dropped to 3.4%, matching the lowest level since 1969, while average hourly earnings rose 0.5% for the month, exceeding the estimated 0.3% and marking the largest monthly increase in a year, per a CNBC article.
By now, we all know that the U.S. economy is going through a crisis triggered by its regional banking sector that started in early March.The collapse of three U.S. regional banks since March and the likely failure of two more (Pacific Western Bank and Western Alliance) raised fears of a volley of bank failures last week. Meanwhile, Apple posted solid Q2 earnings (read:
Take a Bite of Apple With These ETFs Post Solid Q2 Earnings).
Against this backdrop, below, we highlight a few winning ETFs of last week.
ETFs in Focus Cannabis Advisorshares Poseidon Dynamic Cannabis ETF – Up 14.5%
Cannabis-related stocks experienced a significant boost lately as the Secure and Fair Enforcement (SAFE) Banking Act was re-introduced in the U.S. Senate and House of Representatives. Currently, many banks avoid working with marijuana companies due to the industry's illegal status at the federal level. This has led to a reliance on cash transactions, making it difficult for cannabis businesses to access loans, lines of credit, and other essential financial services. If passed, the SAFE Banking Act would level the playing field for marijuana businesses in states where cannabis is cultivated, facilitating growth and attracting investment.
Biotech Virtus Lifesci Biotech Clinical Trials ETF ( BBC Quick Quote BBC - Free Report) – Up 8.3%
The biopharma space is hot with mergers and acquisitions currently. In the first quarter of this year, total healthcare and life sciences M&A in the United States was about $71 billion, more than double the $28 billion seen in the same quarter last year,
according to KPMG, as quoted on barrons.com. Plus, a solid pipeline of research and developments and the incorporation of AI in their R&D division have also been driving prices. Gold Mining US Global Go Gold and Precious Metal Miners ETF ( GOAU Quick Quote GOAU - Free Report) – Up 7.4%
Gold prices surged last week as the greenback lost some strength. The banking crisis has resurfaced. Benchmark treasury yields declined last week from 3.59% to 3.44%. Recessionary prices are currently baked into gold’s valuation. As a result, gold and precious metal mining ETF jumped last week.
Interest Rate Hedge ETF Simplify Interest Rate Hedge ETF ( PFIX Quick Quote PFIX - Free Report) – Up 5.52%
The Simplify Interest Rate Hedge ETF seeks to hedge interest rate movements arising from rising long-term interest rates, and to benefit from market stress when fixed-income volatility increases, while providing the potential for income. As the Fed hiked rates, the demand for interest rate hedge ETF rose.