We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Wall Street Sees Worst Week in 2 Years: ETF Winners & Losers
Read MoreHide Full Article
Wall Street suffered its worst week in more than two years with a trade war brewing between the United States and China — the world’s two biggest economies. The Dow Jones Industrial Average and the S&P 500 tumbled 5.7% and 5.9%, respectively, last week while the Nasdaq Composite Index shed 6.5%.
Behind The Trade War Fears
Trump signed an executive memorandum to impose tariffs on up to $60 billion in Chinese imports targeting the technology, telecommunications and apparel sectors. In response, China has proposed a list of 128 U.S. products worth $3 billion as potential retaliation targets. The list includes wine, fresh fruit, dried fruit and nuts, steel pipes, modified ethanol and ginseng, with a potential 15% duty, and pork and recycled aluminum goods with a possible 25% tariff.
The latest turmoil has sent eight of the 11 S&P 500 sectors into correction territory (decline of at least 10% from the latest peak), per CNBC. Technology, the hot and soaring sector of this year, was the worst performer plunging 7.9% last week as it was caught in a twin attack of the Facebook data scandal and its large foreign operations. Most of the tech companies do business outside the United States and are highly vulnerable to trade disputes.
While all the tech ETFs saw terrible trading last week, Guggenheim China Technology ETF (CQQQ - Free Report) and iShares Dow Jones US Technology ETF (IYW - Free Report) stole the show, tumbling more than 8%. Both funds have a Zacks ETF Rank #2 (Buy) (read: Is the Rout in Tech ETFs Transitory?).
Banking stocks also saw steep declines as interest rates plummeted, reversing all their gains made earlier last week. This is because investors who feared a trade war took flight to safety, pushing yields down. The 10-year Treasury yields slipped to a six-week low of 2.792% from 2.83% but ended the week at 2.81%. As such, First Trust Nasdaq Bank ETF (FTXO - Free Report) and PowerShares KBW Regional Banking Portfolio (KBWR - Free Report) were the worst hit, losing more than 8.2% last week. FTXO has a Zacks ETF Rank #3 (Hold) while KBWR carries a Zacks ETF Rank #2.
If the tariff and counter-tariff situation worsens, the Fed could adopt a slow and steady path for rate hike intensifying worry for the banks and the related ETFs.
Mega cap ETFs, which comprise stocks that derive most of their revenues outside the United States and are prone to trade war risk, also saw tumultuous trading last week with Guggenheim S&P 500 Top 50 ETF (XLG - Free Report) and iShares S&P 100 ETF (OEF - Free Report) declining 6.8%. The former has a Zacks ETF Rank #2 while the latter carries a Zacks ETF Rank #3.
Winners
Gold surged 2.6% last week, marking its biggest weekly gain since September 2017, boosted by investors’ drive to safe haven assets. Acting as leveraged plays on underlying metal price, gold miners witnessed more gains than their bullion cousins. That said, Sprott Junior Gold Miners ETF (SGDJ - Free Report) has emerged as a huge winner of the prevailing trade war tension, gaining 7.3% last week (read: What Lies Ahead for Gold ETFs?).
The trade war threats have also raised the appeal of the U.S. government bonds tracking the long end of the yield curve. Vanguard Long-Term Government Bond ETF (VGLT - Free Report) and PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ - Free Report) were in the green with 0.4% gains, recouping all the losses made early last week from Fed rate hikes. However, the two funds currently have a Zacks ETF Rank #4 (Sell), suggesting that trade war fears could turn the fate of these products, which often carry a safe haven status.
Though the small-cap stocks have been the victim of the broad-market sell-off, they hold up much better than the larger ones. This is because small-cap stocks have less international exposure and generate most of their revenues from the domestic market. These pint-sized stocks are less vulnerable to a trade war or any other political issues and could better insulate investors’ against retaliation if occurs. Franklin LibertyQ U.S. Small Cap Equity ETF (FLQS - Free Report) was the winner in the small-cap space last week, having gained 2.7% (read: Focus on Small-Cap ETFs Amid Trade War Fears).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Wall Street Sees Worst Week in 2 Years: ETF Winners & Losers
Wall Street suffered its worst week in more than two years with a trade war brewing between the United States and China — the world’s two biggest economies. The Dow Jones Industrial Average and the S&P 500 tumbled 5.7% and 5.9%, respectively, last week while the Nasdaq Composite Index shed 6.5%.
Behind The Trade War Fears
Trump signed an executive memorandum to impose tariffs on up to $60 billion in Chinese imports targeting the technology, telecommunications and apparel sectors. In response, China has proposed a list of 128 U.S. products worth $3 billion as potential retaliation targets. The list includes wine, fresh fruit, dried fruit and nuts, steel pipes, modified ethanol and ginseng, with a potential 15% duty, and pork and recycled aluminum goods with a possible 25% tariff.
The round of sanctions and retaliation could trigger a global trade war, hurting the global economy and corporate profits at big U.S. exporters (read: Trade War Fears Loom: Protect Your Portfolio With These ETFs).
Market Impact
The latest turmoil has sent eight of the 11 S&P 500 sectors into correction territory (decline of at least 10% from the latest peak), per CNBC. Technology, the hot and soaring sector of this year, was the worst performer plunging 7.9% last week as it was caught in a twin attack of the Facebook data scandal and its large foreign operations. Most of the tech companies do business outside the United States and are highly vulnerable to trade disputes.
While all the tech ETFs saw terrible trading last week, Guggenheim China Technology ETF (CQQQ - Free Report) and iShares Dow Jones US Technology ETF (IYW - Free Report) stole the show, tumbling more than 8%. Both funds have a Zacks ETF Rank #2 (Buy) (read: Is the Rout in Tech ETFs Transitory?).
Banking stocks also saw steep declines as interest rates plummeted, reversing all their gains made earlier last week. This is because investors who feared a trade war took flight to safety, pushing yields down. The 10-year Treasury yields slipped to a six-week low of 2.792% from 2.83% but ended the week at 2.81%. As such, First Trust Nasdaq Bank ETF (FTXO - Free Report) and PowerShares KBW Regional Banking Portfolio (KBWR - Free Report) were the worst hit, losing more than 8.2% last week. FTXO has a Zacks ETF Rank #3 (Hold) while KBWR carries a Zacks ETF Rank #2.
If the tariff and counter-tariff situation worsens, the Fed could adopt a slow and steady path for rate hike intensifying worry for the banks and the related ETFs.
Mega cap ETFs, which comprise stocks that derive most of their revenues outside the United States and are prone to trade war risk, also saw tumultuous trading last week with Guggenheim S&P 500 Top 50 ETF (XLG - Free Report) and iShares S&P 100 ETF (OEF - Free Report) declining 6.8%. The former has a Zacks ETF Rank #2 while the latter carries a Zacks ETF Rank #3.
Winners
Gold surged 2.6% last week, marking its biggest weekly gain since September 2017, boosted by investors’ drive to safe haven assets. Acting as leveraged plays on underlying metal price, gold miners witnessed more gains than their bullion cousins. That said, Sprott Junior Gold Miners ETF (SGDJ - Free Report) has emerged as a huge winner of the prevailing trade war tension, gaining 7.3% last week (read: What Lies Ahead for Gold ETFs?).
The trade war threats have also raised the appeal of the U.S. government bonds tracking the long end of the yield curve. Vanguard Long-Term Government Bond ETF (VGLT - Free Report) and PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ - Free Report) were in the green with 0.4% gains, recouping all the losses made early last week from Fed rate hikes. However, the two funds currently have a Zacks ETF Rank #4 (Sell), suggesting that trade war fears could turn the fate of these products, which often carry a safe haven status.
Though the small-cap stocks have been the victim of the broad-market sell-off, they hold up much better than the larger ones. This is because small-cap stocks have less international exposure and generate most of their revenues from the domestic market. These pint-sized stocks are less vulnerable to a trade war or any other political issues and could better insulate investors’ against retaliation if occurs. Franklin LibertyQ U.S. Small Cap Equity ETF (FLQS - Free Report) was the winner in the small-cap space last week, having gained 2.7% (read: Focus on Small-Cap ETFs Amid Trade War Fears).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>