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April Emerges as Worst Month of 2024: Best ETF Areas
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April became the worst month of 2024 for Wall Street as the S&P 500 lost 3.4%, the Dow Jones too retreated 3.4%, and the Nasdaq was off by 3.8%. Rising rate worries mainly weighed on Wall Street in April. The U.S. economy has been under pressure of high inflation and slowing growth. Meanwhile, rising geopolitical tensions give cues of inflation remaining hot in the near term.
Notably, Fed Chair Jerome Powell indicated last month that the central bank is in no hurry to reduce borrowing costs due to sticky inflation. In mid-April, Powell indicated a delay in rate cuts. Powell also highlighted the persistent challenge of inflation, indicating that it will take longer than anticipated to bring inflation down to the Fed's 2% target.
The Fed's preferred gauge for inflation — the "core" Personal Consumption Expenditures (PCE) index, excluding volatile food and energy sectors — rose 3.7% year over year in the first quarter. This topped estimates of 3.4% and marked a substantial increase from the 2% gain in the previous quarter.
Meanwhile, in Q1, the U.S. economy grew at the slowest pace in two years as consumer and government spending cooled due to a sharp increase in inflation. U.S. gross domestic product (GDP) increased at a 1.6% annualized rate during January-March 2024, missing Wall Street expectations of a larger rise of 2.5% (read: 4 ETF Areas to Play Amid Slower Growth & Rising Inflation).
Consumer confidence also fell sharply in April as inflation worries and a downbeat outlook on the job market pushed optimism back to its lowest level since 2022. The Conference Board's consumer confidence index retreated to 97 in April, below economists' expectations of 104 and lower than the March reading of 103.1.
While the Fed rhetoric and economic data points pulled the strings of the market movement for most of April, the last few days of the month were taken over by key corporate earnings releases, especially from the big tech companies. The underlying tone of the corporate releases was the huge investments in artificial intelligence (AI) (read: 4 ETFs to Tap the Renewed AI Craze on Wall Street).
Top ETF Areas in Focus
Against this backdrop, below we highlight a few winning ETF areas of the month of April.
Global X Interest Rate Hedge ETF (RATE - Free Report) – Up 13.6%
As the Fed rhetoric was hawkish, the benchmark U.S. treasury yields started April at around 4.33%, hit a high of 4.70% and ended the month at 4.69%. As a result, ETFs that offer protection against rising rates gained substantially in April (read: Fed Rhetoric Turns Hawkish: ETF Strategies to Play Rising Yields).
Silver Miners
Global X Silver Miners ETF (SIL - Free Report) – Up 16.6%
iShares MSCI Global Silver Miners ETF (SLVP - Free Report) – Up 16.4%
Silver prices globally hit a 3-year high in April. The recent rise in silver prices could be attributed to flare-ups in geopolitical tensions that led to an increased safe-haven demand and industrial demand due to global economic resiliency.
Strong manufacturing data from the United States and China, coupled with the growth of green energy infrastructure, is boosting silver demand. Experts suggest that silver is essential in sectors like photovoltaics (PVs), and as solar installations increase, so does the demand for the metal.
Copper
United States Copper Index Fund (CPER - Free Report) – Up 15.8%
The run-up in copper prices was driven by pledges from Chinese smelters to cut output by 5-10% in the face of tighter-than-expected concentrate supply and overcapacity after years of relentless expansion. The surging demand driven by the AI boom and energy transition have also led to the copper price rally.
Turkish stocks have gained as the country’s equities market and high inflation sent local savers piling into shares, per Financial Times. The superb start for Turkish equities this year came on the heels of high inflation that weighed on consumers’ savings and retail investors are looking to tap into the tech fervor that has gripped global markets this year. In March, inflation rose to 68.50%, the highest level since November 2022. Market participants expect inflation to end the year around 44%, higher than the central bank's forecast of 36%, per tardingeconomics.
Aluminum is also one of the most used industrial metals that gained substantially in April on tightening supply conditions and a resurgence in manufacturing activity in the world’s largest economies like the United States and China. The Western ban on Russian metals, hopes of a rate cut in Europe and diversification of holdings of central banks also boosted investors’ sentiments.
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April Emerges as Worst Month of 2024: Best ETF Areas
April became the worst month of 2024 for Wall Street as the S&P 500 lost 3.4%, the Dow Jones too retreated 3.4%, and the Nasdaq was off by 3.8%. Rising rate worries mainly weighed on Wall Street in April. The U.S. economy has been under pressure of high inflation and slowing growth. Meanwhile, rising geopolitical tensions give cues of inflation remaining hot in the near term.
Notably, Fed Chair Jerome Powell indicated last month that the central bank is in no hurry to reduce borrowing costs due to sticky inflation. In mid-April, Powell indicated a delay in rate cuts. Powell also highlighted the persistent challenge of inflation, indicating that it will take longer than anticipated to bring inflation down to the Fed's 2% target.
The Fed's preferred gauge for inflation — the "core" Personal Consumption Expenditures (PCE) index, excluding volatile food and energy sectors — rose 3.7% year over year in the first quarter. This topped estimates of 3.4% and marked a substantial increase from the 2% gain in the previous quarter.
Meanwhile, in Q1, the U.S. economy grew at the slowest pace in two years as consumer and government spending cooled due to a sharp increase in inflation. U.S. gross domestic product (GDP) increased at a 1.6% annualized rate during January-March 2024, missing Wall Street expectations of a larger rise of 2.5% (read: 4 ETF Areas to Play Amid Slower Growth & Rising Inflation).
Consumer confidence also fell sharply in April as inflation worries and a downbeat outlook on the job market pushed optimism back to its lowest level since 2022. The Conference Board's consumer confidence index retreated to 97 in April, below economists' expectations of 104 and lower than the March reading of 103.1.
While the Fed rhetoric and economic data points pulled the strings of the market movement for most of April, the last few days of the month were taken over by key corporate earnings releases, especially from the big tech companies. The underlying tone of the corporate releases was the huge investments in artificial intelligence (AI) (read: 4 ETFs to Tap the Renewed AI Craze on Wall Street).
Top ETF Areas in Focus
Against this backdrop, below we highlight a few winning ETF areas of the month of April.
Interest Rate Beating Products
Simplify Interest Rate Hedge ETF (PFIX - Free Report) – Up 18.7%
Global X Interest Rate Hedge ETF (RATE - Free Report) – Up 13.6%
As the Fed rhetoric was hawkish, the benchmark U.S. treasury yields started April at around 4.33%, hit a high of 4.70% and ended the month at 4.69%. As a result, ETFs that offer protection against rising rates gained substantially in April (read: Fed Rhetoric Turns Hawkish: ETF Strategies to Play Rising Yields).
Silver Miners
Global X Silver Miners ETF (SIL - Free Report) – Up 16.6%
iShares MSCI Global Silver Miners ETF (SLVP - Free Report) – Up 16.4%
Silver prices globally hit a 3-year high in April. The recent rise in silver prices could be attributed to flare-ups in geopolitical tensions that led to an increased safe-haven demand and industrial demand due to global economic resiliency.
Strong manufacturing data from the United States and China, coupled with the growth of green energy infrastructure, is boosting silver demand. Experts suggest that silver is essential in sectors like photovoltaics (PVs), and as solar installations increase, so does the demand for the metal.
Copper
United States Copper Index Fund (CPER - Free Report) – Up 15.8%
The run-up in copper prices was driven by pledges from Chinese smelters to cut output by 5-10% in the face of tighter-than-expected concentrate supply and overcapacity after years of relentless expansion. The surging demand driven by the AI boom and energy transition have also led to the copper price rally.
Turkey
iShares MSCI Turkey ETF (TUR - Free Report) – Up 12.1%
Turkish stocks have gained as the country’s equities market and high inflation sent local savers piling into shares, per Financial Times. The superb start for Turkish equities this year came on the heels of high inflation that weighed on consumers’ savings and retail investors are looking to tap into the tech fervor that has gripped global markets this year. In March, inflation rose to 68.50%, the highest level since November 2022. Market participants expect inflation to end the year around 44%, higher than the central bank's forecast of 36%, per tardingeconomics.
Aluminum
USCF Aluminum Strategy Fund (ALUM - Free Report) – Up 11.1%
Aluminum is also one of the most used industrial metals that gained substantially in April on tightening supply conditions and a resurgence in manufacturing activity in the world’s largest economies like the United States and China. The Western ban on Russian metals, hopes of a rate cut in Europe and diversification of holdings of central banks also boosted investors’ sentiments.