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Wall Street displayed a muted performance last week as the S&P 500 and the Nasdaq snapped the prolonged winning streak. The S&P 500 (down 1.4%), the Dow Jones (down 1.7%) and the Nasdaq (down 1.4%) — the three big U.S. equity indexes — took a dive last week. The reason behind the fall was renewed rate hike worries.
The benchmark U.S. treasury yield was 3.77% at the start of the week, which ended at 3.74%, having hit a high of 3.80% on Jun 22, 2023. Fed Chair Jerome Powell stated last week that most central bank officials anticipate raising interest rates by the end of 2023. While the Fed decided to maintain the target range at the June policy meeting, Powell's remarks point to the tightening of the monetary policy all over again.
Median expectation for the funds rates now stands at 5.6% by the end of 2023. This implies two more quarter-point hikes in the remaining meetings this year, creating a very hawkish pause. Three officials see rates rising closer to 6%. The next Fed meeting at the end of July means a lot to investors. About 80% chance of a rate hike in July is currently priced in.
While rising rate worries weighed on growth sectors like technology, several analysts also started believing that several growth stocks are overvalued. Barclays’ analyst Dan Levy and Morgan Stanley analyst Adam Jonas downgraded Tesla last week (read: Time to Offload Tesla? Inverse ETFs to Earn Profits).
Short sellers are expecting the S&P 500’s impressive 2023 rally to fizzle out. This is because of the fact that the performance of the S&P 500 wouldn’t be enthusiastic without the contribution of seven big tech companies. Some analysts believe that the AI-fueled rally might soon hit a bump.
Against this backdrop, below, we highlight a few ETFs that gained decently last week.
Argentina’s S&P Merval stock index has jumped to its highest level in dollar terms since 2019 ahead of the nation’s presidential primaries in August. Markets underperformed that year due to president Alberto’s surprise victory over former president Mauricio Macri in the country's primary elections. In 2020, amid the pandemic, the index again plunged. With inflation surging toward triple digits, the Argentina market struggled to stage a material recovery in the ensuing years.
Corn futures increased above $6.4 per bushel amid concerns about low supply. Dry weather in the American Midwest has weighed on yields from the key growing region. Additionally, Russia continued to state that the current deal to protect Ukrainian grain shipments are unlikely to resume past July, darkening hopes of a solid supply from one of the world’s top exporters (per tradingeconomics).
US Anti-Beta Fund Mkt Neutral Quantshares (BTAL) – Up 1.5%
The underlying Dow Jones U.S. Thematic Market Neutral Anti-Beta Index of the fund is a long/short market-neutral index that is dollar-neutral. As the broader market slumped, this long/short ETF gained traction. This is one of the best funds to hedge a falling market.
Vaneck Brazil Smallcap ETF (BRF - Free Report) – Up 1.4%
Investors are buying the dip in Brazil’s stock market as the nation’s central bank is likely to ease stubbornly high rates, per Bloomberg. Fidelity Investments and some local hedge funds are betting on Brazil, as they believe that likely decline in borrowing costs will boost corporate growth — just as President Luiz Inacio Lula da Silva’s new fiscal framework moves forward toward materialization.
The underlying Bloomberg U.S. Treasury STRIPS 20—30 Year Equal Par Bond Index includes zero-coupon U.S. Treasury securities, which are backed by the full faith and credit of the U.S. government, with maturities ranging from 20 to 30 years. As the long-term bond yields slumped on renewed global growth slowdown fears, this long-term U.S. treasury bond ETF gained.
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Top-Performing ETFs of Last Week
Wall Street displayed a muted performance last week as the S&P 500 and the Nasdaq snapped the prolonged winning streak. The S&P 500 (down 1.4%), the Dow Jones (down 1.7%) and the Nasdaq (down 1.4%) — the three big U.S. equity indexes — took a dive last week. The reason behind the fall was renewed rate hike worries.
The benchmark U.S. treasury yield was 3.77% at the start of the week, which ended at 3.74%, having hit a high of 3.80% on Jun 22, 2023. Fed Chair Jerome Powell stated last week that most central bank officials anticipate raising interest rates by the end of 2023. While the Fed decided to maintain the target range at the June policy meeting, Powell's remarks point to the tightening of the monetary policy all over again.
Median expectation for the funds rates now stands at 5.6% by the end of 2023. This implies two more quarter-point hikes in the remaining meetings this year, creating a very hawkish pause. Three officials see rates rising closer to 6%. The next Fed meeting at the end of July means a lot to investors. About 80% chance of a rate hike in July is currently priced in.
While rising rate worries weighed on growth sectors like technology, several analysts also started believing that several growth stocks are overvalued. Barclays’ analyst Dan Levy and Morgan Stanley analyst Adam Jonas downgraded Tesla last week (read: Time to Offload Tesla? Inverse ETFs to Earn Profits).
Short sellers are expecting the S&P 500’s impressive 2023 rally to fizzle out. This is because of the fact that the performance of the S&P 500 wouldn’t be enthusiastic without the contribution of seven big tech companies. Some analysts believe that the AI-fueled rally might soon hit a bump.
Against this backdrop, below, we highlight a few ETFs that gained decently last week.
ETFs in Focus
Global X MSCI Argentina ETF (ARGT - Free Report) – Up 4.3%
Argentina’s S&P Merval stock index has jumped to its highest level in dollar terms since 2019 ahead of the nation’s presidential primaries in August. Markets underperformed that year due to president Alberto’s surprise victory over former president Mauricio Macri in the country's primary elections. In 2020, amid the pandemic, the index again plunged. With inflation surging toward triple digits, the Argentina market struggled to stage a material recovery in the ensuing years.
Teucrium Corn (CORN) – Up 1.7%
Corn futures increased above $6.4 per bushel amid concerns about low supply. Dry weather in the American Midwest has weighed on yields from the key growing region. Additionally, Russia continued to state that the current deal to protect Ukrainian grain shipments are unlikely to resume past July, darkening hopes of a solid supply from one of the world’s top exporters (per tradingeconomics).
US Anti-Beta Fund Mkt Neutral Quantshares (BTAL) – Up 1.5%
The underlying Dow Jones U.S. Thematic Market Neutral Anti-Beta Index of the fund is a long/short market-neutral index that is dollar-neutral. As the broader market slumped, this long/short ETF gained traction. This is one of the best funds to hedge a falling market.
Vaneck Brazil Smallcap ETF (BRF - Free Report) – Up 1.4%
Investors are buying the dip in Brazil’s stock market as the nation’s central bank is likely to ease stubbornly high rates, per Bloomberg. Fidelity Investments and some local hedge funds are betting on Brazil, as they believe that likely decline in borrowing costs will boost corporate growth — just as President Luiz Inacio Lula da Silva’s new fiscal framework moves forward toward materialization.
Vanguard Extended Duration Treasury ETF (EDV - Free Report) – Up 0.6%
The underlying Bloomberg U.S. Treasury STRIPS 20—30 Year Equal Par Bond Index includes zero-coupon U.S. Treasury securities, which are backed by the full faith and credit of the U.S. government, with maturities ranging from 20 to 30 years. As the long-term bond yields slumped on renewed global growth slowdown fears, this long-term U.S. treasury bond ETF gained.