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Top & Flop ETF Areas of Wall Street's Best February in Decade
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Wall Street surged to close out February with the S&P 500 and Nasdaq Composite notching their best February since 2015. The Nasdaq gained more than 6% and the S&P 500 advanced more than 5% throughout the month. The Dow Jones eked out 1.24% gains in the past one month while the Russell 2000 surged 4.1% past month.
The Nasdaq Composite soared 0.9% on the final day of the month, closing at a record high of 16,091.92, its first such milestone since November 2021. The S&P 500 also climbed 0.5% to end the day at 5,095.88, setting a new record. Meanwhile, the Dow Jones Industrial Average saw a modest uptick of 0.1%.
Slowing PCE Inflation
Investor sentiment was buoyed by a notable easing in inflation. U.S. Personal Consumption Expenditures (PCE) inflation dropped to 2.4% on a yearly basis in January. This reading followed the 2.6% uptick recorded in December and came in line with the market expectation. On a monthly basis, the PCE Price Index rose 0.3% as forecast. The "core" PCE also dipped to 2.8% from 2.9% in the preceding month.
Bitcoin Rally
Meanwhile, in the cryptocurrency realm, bitcoin maintained its position above $62,000 on Feb 29, 2024. The arrival of spot bitcoin ETFs has helped the cryptocurrency reach levels not seen since late 2021. Bitcoin has been leading the charge with a huge 44% price jump in February, marking its most substantial monthly gain since December 2020 (read: Will Bitcoin Hit $200,000 in Current Bull Market? ETFs in Focus).
Fed Rate Cuts Unlikely in March: Expected in Late 2024
Markets see a strong chance of the Federal Reserve keeping the policy rate unchanged in March and May as the Fed looks for more cues of a sustained economic recovery and falling inflation. However, Cleveland Fed president Loretta Mester expects three rate cuts later in 2024.
Winning ETF Areas
Against this backdrop, below we highlight a few winning ETF areas of the month of February.
Cryptocurrency
First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT - Free Report) – Up 56.8%
The world's largest cryptocurrency hit a high of $63,968 — its first trip above $60,000 since November 2021 — with a monthly gain of more than 44%. Not only bitcoin, other cryptocurrencies also followed the suit. The surge primarily came on the back of the arrival of spot bitcoin ETFs, bitcoin’s growing acceptance as a hedge against inflation as well as a good replacement of gold and a scheduled halving event. The upcoming halving event scheduled for Apr 2024 will lessen the supply of bitcoins, which in turn would boost prices (read: Will Bitcoin Hit $200,000 in Current Bull Market? ETFs in Focus).
It is an exchange-traded fund (ETF) designed to reflect the daily price movements of the near-dated dry bulk freight futures. BDRY offers investors unlevered exposure to dry bulk freight without the need for a futures account.
Shipping companies have been the best performing stocks lately, as the re-routing of vessels following attacks in the Red Sea boosted freight rates. Shippers have avoided the region due to attacks on commercial vessels in the Red Sea since mid-November.
Biotech
Range Cancer Therapeutics ETF (CNCR - Free Report) – Up 23.5%
The healthcare space is experiencing significant advantages from innovative medications, recent approvals of new drugs, technological progress, increased deal activities, and robust earnings. Notably, investor interest in segments such as weight-loss therapies has propelled growth within the sector. The merger and acquisition space has also been opening up for the biotech companies.
The optimism over artificial intelligence has been driving the stock market higher, thereby benefiting the related ETFs. Among the entire AI space, generative AI has been gaining more traction. The Generative AI market is forecasted to achieve a market size of $66.62 billion by 2024, with an anticipated compound annual growth rate (CAGR) of 20.80% from 2024 to 2030, per Statista.
Losing ETF Areas
Hedge ETF
Simplify Tail Risk Strategy ETF ) – Down 73%
The Simplify Tail Risk Strategy ETF seeks to provide investors with a standalone solution for hedging diversified portfolios against severe equity market selloffs. Amid the broad stock market rally, the appeal for low-risk ETFs has diminished in February.
United States Natural Gas Fund LP (UNG - Free Report) ) – Down 17.9%
Natural gas storage capacity hasn't increased at a clip with production. And output has been surging in the past decade. Henry Hub daily natural gas spot price dropped to record lows in February. High natural gas output, low natural gas consumption, and higher natural gas inventories than the previous five-year (2018–22) average contributed to prices falling for much of 2023 and the first two months of 2024.
Uranium mining companies’ prices also went downhill past month. The underlying Nasdaq Sprott Junior Uranium Miners Index track the performance of companies that derive at least 50% of their revenue and assets from mining, exploration, development, and production of uranium; earning uranium royalties; and supplying uranium.
The greenback ETF Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) has gained 1.4% past month. This, in turn, weighed on gold and silver bullion ETFs. Silver bullion ETF SLV retreated 2.3% in February. As the mining companies act as leveraged plays of the underlying metal, SILJ slumped more than the silver bullion.
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Top & Flop ETF Areas of Wall Street's Best February in Decade
Wall Street surged to close out February with the S&P 500 and Nasdaq Composite notching their best February since 2015. The Nasdaq gained more than 6% and the S&P 500 advanced more than 5% throughout the month. The Dow Jones eked out 1.24% gains in the past one month while the Russell 2000 surged 4.1% past month.
The Nasdaq Composite soared 0.9% on the final day of the month, closing at a record high of 16,091.92, its first such milestone since November 2021. The S&P 500 also climbed 0.5% to end the day at 5,095.88, setting a new record. Meanwhile, the Dow Jones Industrial Average saw a modest uptick of 0.1%.
Slowing PCE Inflation
Investor sentiment was buoyed by a notable easing in inflation. U.S. Personal Consumption Expenditures (PCE) inflation dropped to 2.4% on a yearly basis in January. This reading followed the 2.6% uptick recorded in December and came in line with the market expectation. On a monthly basis, the PCE Price Index rose 0.3% as forecast. The "core" PCE also dipped to 2.8% from 2.9% in the preceding month.
Bitcoin Rally
Meanwhile, in the cryptocurrency realm, bitcoin maintained its position above $62,000 on Feb 29, 2024. The arrival of spot bitcoin ETFs has helped the cryptocurrency reach levels not seen since late 2021. Bitcoin has been leading the charge with a huge 44% price jump in February, marking its most substantial monthly gain since December 2020 (read: Will Bitcoin Hit $200,000 in Current Bull Market? ETFs in Focus).
Fed Rate Cuts Unlikely in March: Expected in Late 2024
Markets see a strong chance of the Federal Reserve keeping the policy rate unchanged in March and May as the Fed looks for more cues of a sustained economic recovery and falling inflation. However, Cleveland Fed president Loretta Mester expects three rate cuts later in 2024.
Winning ETF Areas
Against this backdrop, below we highlight a few winning ETF areas of the month of February.
Cryptocurrency
First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT - Free Report) – Up 56.8%
ProShares Ether Strategy ETF (EETH - Free Report) – Up 49.9%
The world's largest cryptocurrency hit a high of $63,968 — its first trip above $60,000 since November 2021 — with a monthly gain of more than 44%. Not only bitcoin, other cryptocurrencies also followed the suit. The surge primarily came on the back of the arrival of spot bitcoin ETFs, bitcoin’s growing acceptance as a hedge against inflation as well as a good replacement of gold and a scheduled halving event. The upcoming halving event scheduled for Apr 2024 will lessen the supply of bitcoins, which in turn would boost prices (read: Will Bitcoin Hit $200,000 in Current Bull Market? ETFs in Focus).
Shipping
Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) – Up 37.9%
It is an exchange-traded fund (ETF) designed to reflect the daily price movements of the near-dated dry bulk freight futures. BDRY offers investors unlevered exposure to dry bulk freight without the need for a futures account.
Shipping companies have been the best performing stocks lately, as the re-routing of vessels following attacks in the Red Sea boosted freight rates. Shippers have avoided the region due to attacks on commercial vessels in the Red Sea since mid-November.
Biotech
Range Cancer Therapeutics ETF (CNCR - Free Report) – Up 23.5%
Virtus LifeSci Biotech Clinical Trials ETF (BBC - Free Report) – Up 19.8%
The healthcare space is experiencing significant advantages from innovative medications, recent approvals of new drugs, technological progress, increased deal activities, and robust earnings. Notably, investor interest in segments such as weight-loss therapies has propelled growth within the sector. The merger and acquisition space has also been opening up for the biotech companies.
Artificial Intelligence
Themes Generative Artificial Intelligence ETF (WISE - Free Report) – Up 16.7%
The optimism over artificial intelligence has been driving the stock market higher, thereby benefiting the related ETFs. Among the entire AI space, generative AI has been gaining more traction. The Generative AI market is forecasted to achieve a market size of $66.62 billion by 2024, with an anticipated compound annual growth rate (CAGR) of 20.80% from 2024 to 2030, per Statista.
Losing ETF Areas
Hedge ETF
Simplify Tail Risk Strategy ETF ) – Down 73%
The Simplify Tail Risk Strategy ETF seeks to provide investors with a standalone solution for hedging diversified portfolios against severe equity market selloffs. Amid the broad stock market rally, the appeal for low-risk ETFs has diminished in February.
United States Natural Gas Fund LP (UNG - Free Report) ) – Down 17.9%
Natural gas storage capacity hasn't increased at a clip with production. And output has been surging in the past decade. Henry Hub daily natural gas spot price dropped to record lows in February. High natural gas output, low natural gas consumption, and higher natural gas inventories than the previous five-year (2018–22) average contributed to prices falling for much of 2023 and the first two months of 2024.
Sprott Junior Uranium Miners ETF (URNJ - Free Report) ) – Down 12.8%
Uranium mining companies’ prices also went downhill past month. The underlying Nasdaq Sprott Junior Uranium Miners Index track the performance of companies that derive at least 50% of their revenue and assets from mining, exploration, development, and production of uranium; earning uranium royalties; and supplying uranium.
Amplify Junior Silver Miners ETF (SILJ - Free Report) ) – Down 12.6%
The greenback ETF Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) has gained 1.4% past month. This, in turn, weighed on gold and silver bullion ETFs. Silver bullion ETF SLV retreated 2.3% in February. As the mining companies act as leveraged plays of the underlying metal, SILJ slumped more than the silver bullion.