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Long/short, energy, Walmart-linked, insurance and consumer staples ETFs led last week's gains.
Rising crude prices lifted oil exposure, while AI stock losses favored defensive market strategies.
Inflation fears and tech volatility drove investors toward value-focused and defensive stocks.
U.S. stocks just recorded a largely losing week as investors moved away from technology and artificial intelligence (AI)-related stocks amid rising oil prices and concerns over inflation.
The S&P 500 dropped about 2% last week, the Nasdaq Composite plunged 4.5%. The Nasdaq logged its worst weekly performance since June, per CNBC. The Russell 2000 slumped 3.1% last week.
However, the Dow Jones Industrial Average inched up about 0.7%. Meanwhile, the Cboe Volatility Index (VIX) climbed above 22 for the first time in four months, signaling heightened market anxiety.
Semiconductor Stocks Lead Weekly Declines
Chip stocks suffered massive losses, with the VanEck Semiconductor ETF (SMH - Free Report) falling about 10% last week. Semiconductor stocks faced pressure throughout the week amid concerns about intensifying competition from China.
AI Infrastructure Debt Raises Investor Concerns
Investors are increasingly questioning whether technology companies are taking on excessive debt to finance the AI infrastructure boom. Shares of neocloud provider CoreWeave, whose total debt has climbed above $51 billion (per CNBC), plunged nearly 12% on Friday, extending its weekly losses to about 24%.
Rising Oil Prices Support Energy Stocks
Energy stocks gained on Friday as crude prices advanced amid escalating tensions between the United States and Iran, alongside renewed concerns over the Russia-Ukraine conflict.
The surge in energy prices added to concerns about inflationary pressures across the economy. Crude oil is now trading near $100 a barrel, Brent is around $110, and William Blair energy research analyst Neal Dingmann thinks the next move could be a "super spike," as mentioned on Yahoo Finance.
Hotter Inflation Complicates the Market Outlook
Investors also faced fresh inflation concerns following hotter-than-expected wholesale price data. U.S. wholesale inflation recorded its largest increase since 2022 (per CNBC), while consumer inflation remained well above the Federal Reserve's 2% target. Consumer prices rose 3.7% annually in September as gas prices surged.
Persistent price pressures could limit the Federal Reserve's flexibility to ease monetary policy, adding another potential headwind for equities, particularly technology stocks whose valuations are sensitive to interest-rate expectations.
Winning ETF Areas of Last Week
Long/Short –AGF U.S. Market Neutral Anti-Beta Fund (BTAL - Free Report) – Up 7.0%
Long-short ETFs rise during a market sell-off because they are designed to profit from a combination of long positions in selected securities and short positions in others. Their performance depends on the strategy that offers cushion in the struggling market.
Energy – United States Oil Fund LP (USO - Free Report) – Up 6.7%
Energy stocks rose last week, thanks to a sharp increase in crude oil prices amid escalating tensions between the United States and Iran, as well as renewed Russia-Ukraine tensions.
Walmart Single-Stock ETF –REX WMT Growth & Income ETF WMTI – Up 5.2%
Walmart Inc. (WMT - Free Report) shares rose 6.5% last week. With consumer prices rising, shoppers may favor Walmart's low prices. WMTI charges 99 bps in fees and yields 35.23% annually.
Insurers can benefit when investors rotate away from volatile AI and semiconductor stocks, seeking businesses with steadier earnings. Major holdings of the fund like The Travelers Companies Inc. (TRV - Free Report) and Chubb Limited (CB - Free Report) saw shares rising last week.
TRV shares gained on earnings strength while Chubb is rising mainly on pre-earnings positioning and a positive earnings-surprise setup. Zacks Consensus Estimate for earnings for CB rose over the past seven fays as well as past one month.
Concerns about AI valuations, rising borrowing costs and semiconductor competition encouraged investors to shift toward relatively defensive consumer stocks. This was basically a risk-off trade.
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5 Top-Performing ETF Areas of Last Week
Key Takeaways
U.S. stocks just recorded a largely losing week as investors moved away from technology and artificial intelligence (AI)-related stocks amid rising oil prices and concerns over inflation.
The S&P 500 dropped about 2% last week, the Nasdaq Composite plunged 4.5%. The Nasdaq logged its worst weekly performance since June, per CNBC. The Russell 2000 slumped 3.1% last week.
However, the Dow Jones Industrial Average inched up about 0.7%. Meanwhile, the Cboe Volatility Index (VIX) climbed above 22 for the first time in four months, signaling heightened market anxiety.
Semiconductor Stocks Lead Weekly Declines
Chip stocks suffered massive losses, with the VanEck Semiconductor ETF (SMH - Free Report) falling about 10% last week. Semiconductor stocks faced pressure throughout the week amid concerns about intensifying competition from China.
AI Infrastructure Debt Raises Investor Concerns
Investors are increasingly questioning whether technology companies are taking on excessive debt to finance the AI infrastructure boom. Shares of neocloud provider CoreWeave, whose total debt has climbed above $51 billion (per CNBC), plunged nearly 12% on Friday, extending its weekly losses to about 24%.
Rising Oil Prices Support Energy Stocks
Energy stocks gained on Friday as crude prices advanced amid escalating tensions between the United States and Iran, alongside renewed concerns over the Russia-Ukraine conflict.
The surge in energy prices added to concerns about inflationary pressures across the economy. Crude oil is now trading near $100 a barrel, Brent is around $110, and William Blair energy research analyst Neal Dingmann thinks the next move could be a "super spike," as mentioned on Yahoo Finance.
Hotter Inflation Complicates the Market Outlook
Investors also faced fresh inflation concerns following hotter-than-expected wholesale price data. U.S. wholesale inflation recorded its largest increase since 2022 (per CNBC), while consumer inflation remained well above the Federal Reserve's 2% target. Consumer prices rose 3.7% annually in September as gas prices surged.
Persistent price pressures could limit the Federal Reserve's flexibility to ease monetary policy, adding another potential headwind for equities, particularly technology stocks whose valuations are sensitive to interest-rate expectations.
Winning ETF Areas of Last Week
Long/Short –AGF U.S. Market Neutral Anti-Beta Fund (BTAL - Free Report) – Up 7.0%
Long-short ETFs rise during a market sell-off because they are designed to profit from a combination of long positions in selected securities and short positions in others. Their performance depends on the strategy that offers cushion in the struggling market.
Energy – United States Oil Fund LP (USO - Free Report) – Up 6.7%
Energy stocks rose last week, thanks to a sharp increase in crude oil prices amid escalating tensions between the United States and Iran, as well as renewed Russia-Ukraine tensions.
Walmart Single-Stock ETF –REX WMT Growth & Income ETF WMTI – Up 5.2%
Walmart Inc. (WMT - Free Report) shares rose 6.5% last week. With consumer prices rising, shoppers may favor Walmart's low prices. WMTI charges 99 bps in fees and yields 35.23% annually.
Insurance –Invesco KBW Property & Casualty Insurance ETF (KBWP - Free Report) – Up 5.1%
Insurers can benefit when investors rotate away from volatile AI and semiconductor stocks, seeking businesses with steadier earnings. Major holdings of the fund like The Travelers Companies Inc. (TRV - Free Report) and Chubb Limited (CB - Free Report) saw shares rising last week.
TRV shares gained on earnings strength while Chubb is rising mainly on pre-earnings positioning and a positive earnings-surprise setup. Zacks Consensus Estimate for earnings for CB rose over the past seven fays as well as past one month.
Consumer Staples – Invesco S&P 500 Equal Weight Consumer Staples ETF (RSPS - Free Report) – Up 5.1%
Concerns about AI valuations, rising borrowing costs and semiconductor competition encouraged investors to shift toward relatively defensive consumer stocks. This was basically a risk-off trade.