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Wall Street gave a mixed performance last week, with the S&P 500 (up 0.5%) and the Nasdaq Composite (up 1.6%) eking out moderate gains while the Dow Jones (down 0.3%) and the Russell 2000 (down 2.2%) traded in the red. While rising rate worries amid fears of a cooling economy weighed on the stock market, an upbeat September jobs report boosted the key U.S. equity gauges on the final trading day of the week.
The U.S. economy added 336,000 jobs in September 2023, well above an upwardly revised 227,000 in August, and ahead of market forecasts of 170,000. It marked the strongest job gain in eight months and well above the 70,000-100,000 needed per month to maintain the growth in the working-age population, per tradingeconomics.
U.S. benchmark treasury yield started the week at 4.69%, hit a high of 4.81% on Oct 3 and ended the week at 4.78%. Since the jobs data came in at sturdy, the Fed might enact one more rate hike in November. But key U.S. equity gauges ruled out worries regarding more restrictive Fed policies and surged.
Against this backdrop, below we highlight a few ETF winners of last week.
As rising rate worries pulled the strings of the market movement last week, this ETF PFIX surged massively. The fund looks to hedge interest rate movements from rising long-term interest rates and benefit from market stress when fixed income volatility increases.
The fund holds a large position in over-the-counter (OTC) interest rate options intended to provide a direct and transparent convex exposure to large upward moves in interest rates and interest rate volatility. The fund charges 50 bps in fees.
Global trade is showing promising signs of recovery, as evident from the insights of Vincent Clerc, the CEO of shipping giant Maersk. This has probably boosted the shipping ETF. The Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC Index measure rates for shipping dry bulk freight (read: Time for Shipping ETFs Amid Improving Global Trade Scenario?).
United States Natural Gas Fund LP (UNG - Free Report) – Up 16.4%
Natural gas prices surged on a bullish EIA report and cooler-than-normal weather. U.S. natural gas futures jumped recently, reaching their highest level since Aug 31. The spike was mainly driven by a more bullish EIA weekly storage report than anticipated. EIA data disclosed a smaller-than-expected storage build of 86 billion cubic feet (bcf) for the week ending Sep 29. The market had forecast a 92-bcf build. Moreover, a cooler temperature is expected across the Midwest, which would boost heating demand.
Global X Interest Rate Hedge ETF (RATE - Free Report) – Up 15.7%
This is another beneficiary of the rising rate environment. RATE looks to achieve its investment objective of providing a hedge against a sharp increase in long-term U.S. interest rates by using OTC instruments that are typically only accessible to institutional investors. The fund charges 47 bps in fees.
AXS Short Innovation Daily ETF (SARK - Free Report) – Up 12.2%
As risk-on sentiments retreated last week due to higher rates, inverse equity ETFs soared. The AXS Short Innovation Daily ETF seeks daily inverse investment results and is intended to be used as a short-term trading vehicle. The fund charges 75 bps in fees.
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Best ETFs of Last Week
Wall Street gave a mixed performance last week, with the S&P 500 (up 0.5%) and the Nasdaq Composite (up 1.6%) eking out moderate gains while the Dow Jones (down 0.3%) and the Russell 2000 (down 2.2%) traded in the red. While rising rate worries amid fears of a cooling economy weighed on the stock market, an upbeat September jobs report boosted the key U.S. equity gauges on the final trading day of the week.
The U.S. economy added 336,000 jobs in September 2023, well above an upwardly revised 227,000 in August, and ahead of market forecasts of 170,000. It marked the strongest job gain in eight months and well above the 70,000-100,000 needed per month to maintain the growth in the working-age population, per tradingeconomics.
U.S. benchmark treasury yield started the week at 4.69%, hit a high of 4.81% on Oct 3 and ended the week at 4.78%. Since the jobs data came in at sturdy, the Fed might enact one more rate hike in November. But key U.S. equity gauges ruled out worries regarding more restrictive Fed policies and surged.
Against this backdrop, below we highlight a few ETF winners of last week.
ETFs in Focus
Simplify Interest Rate Hedge ETF (PFIX - Free Report) – Up 32.3%
As rising rate worries pulled the strings of the market movement last week, this ETF PFIX surged massively. The fund looks to hedge interest rate movements from rising long-term interest rates and benefit from market stress when fixed income volatility increases.
The fund holds a large position in over-the-counter (OTC) interest rate options intended to provide a direct and transparent convex exposure to large upward moves in interest rates and interest rate volatility. The fund charges 50 bps in fees.
Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) – Up 20.6%
Global trade is showing promising signs of recovery, as evident from the insights of Vincent Clerc, the CEO of shipping giant Maersk. This has probably boosted the shipping ETF. The Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC Index measure rates for shipping dry bulk freight (read: Time for Shipping ETFs Amid Improving Global Trade Scenario?).
United States Natural Gas Fund LP (UNG - Free Report) – Up 16.4%
Natural gas prices surged on a bullish EIA report and cooler-than-normal weather. U.S. natural gas futures jumped recently, reaching their highest level since Aug 31. The spike was mainly driven by a more bullish EIA weekly storage report than anticipated. EIA data disclosed a smaller-than-expected storage build of 86 billion cubic feet (bcf) for the week ending Sep 29. The market had forecast a 92-bcf build. Moreover, a cooler temperature is expected across the Midwest, which would boost heating demand.
Global X Interest Rate Hedge ETF (RATE - Free Report) – Up 15.7%
This is another beneficiary of the rising rate environment. RATE looks to achieve its investment objective of providing a hedge against a sharp increase in long-term U.S. interest rates by using OTC instruments that are typically only accessible to institutional investors. The fund charges 47 bps in fees.
AXS Short Innovation Daily ETF (SARK - Free Report) – Up 12.2%
As risk-on sentiments retreated last week due to higher rates, inverse equity ETFs soared. The AXS Short Innovation Daily ETF seeks daily inverse investment results and is intended to be used as a short-term trading vehicle. The fund charges 75 bps in fees.