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Wall Street has been upbeat in the first half of 2023, with the S&P 500, the Nasdaq and the Dow Jones gaining about 14%, 29.5% and 2.4%, respectively. Better-than-expected corporate earnings and the AI boom have been the key trends in the first half. Though the Fed was viewed as less-hawkish initially, rising rate worries resurfaced in June.
Against this backdrop, below, we highlight a few winning and losing sector ETFs of first-half 2023.
The AI boom has brightened the appeal for the FANG+ and semiconductors this year. Wedbush analyst Dan Ives believes that the AI resurgence will usher in the “fourth industrial revolution,” as quoted on CNBC. He expects “a trillion dollars of incremental spend over the next decade” into A.I. Meta, Alphabet, Amazon, Nvidia – all splurged massively into AI. Plus, a less-hawkish Fed has acted as a tailwind for the tech space.
Homebuilding
iShares U.S. Home Construction ETF (ITB - Free Report) – Up 40.5%
The homebuilding sector has been improving lately. Homebuilder sentiment has improved considerably. A dearth of existing homes for sale is propelling homebuilders into the limelight despite prevailing market challenges. This trend, as NAHB’s chief economist Robert Dietz suggests, is likely to persist as potential buyers continue to scout for new construction due to limited available housing inventory. Plus, a less-hawkish Fed bode well for the sector.
Auto
First Trust S-Network Future Vehicles & Technology ETF (CARZ - Free Report) – Up 36.2%
The area has been benefitting from the Electric Vehicles (EV) boom. The EV space is thriving with consolidation activities. Plus, Tesla shares have surged this year on AI mania. Motor Vehicle & Parts Dealers sales have also been gaining. The Q1 earnings of the sector has also come in decent (read: 5 Sector ETFs Win on Q1 Earnings Beat).
iShares U.S. Regional Banks ETF (IAT) – Down 28.9%
The space has been an underperformer in 1H despite some occasional rallies in Q2. Failures of three regional banks from March 2023 have resulted in the crisis in the banking industry (read: Regional Bank ETFs: Value Play or Value Trap?).
Energy
Invesco DWA Energy Momentum ETF (PXI - Free Report) – Down 11.2%
iShares U.S. Oil & Gas Exploration & Production ETF (IEO) – Down 10%
Oil prices slumped about 4% in the second quarter and 12.6% so far this year mainly due to global growth worries. The fall has wreaked havoc in the energy space.
Pharma & Biotech
Range Cancer Therapeutics ETF (CNCR - Free Report) – Down 7.1%
iShares Neuroscience and Healthcare ETF (IBRN) – Down 6.6%
Invesco Dynamic Biotechnology & Genome ETF (PBE) – Down 5.7%
The biotechnology sector is one of the most volatile areas of the stock market. The sector has been beaten-down overall this year. The sector has been suffering due to high inflation and high rates. However, some deal activities in the drug-development industry have led to occasional gains.
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Best & Worst Sector ETFs of First-Half 2023
Wall Street has been upbeat in the first half of 2023, with the S&P 500, the Nasdaq and the Dow Jones gaining about 14%, 29.5% and 2.4%, respectively. Better-than-expected corporate earnings and the AI boom have been the key trends in the first half. Though the Fed was viewed as less-hawkish initially, rising rate worries resurfaced in June.
Against this backdrop, below, we highlight a few winning and losing sector ETFs of first-half 2023.
Winners
Technology
MicroSectors FANG+ ETN (FNGS - Free Report) – Up 70.3%
VanEck Semiconductor ETF (SMH) – Up 49.3%
The AI boom has brightened the appeal for the FANG+ and semiconductors this year. Wedbush analyst Dan Ives believes that the AI resurgence will usher in the “fourth industrial revolution,” as quoted on CNBC. He expects “a trillion dollars of incremental spend over the next decade” into A.I. Meta, Alphabet, Amazon, Nvidia – all splurged massively into AI. Plus, a less-hawkish Fed has acted as a tailwind for the tech space.
Homebuilding
iShares U.S. Home Construction ETF (ITB - Free Report) – Up 40.5%
The homebuilding sector has been improving lately. Homebuilder sentiment has improved considerably. A dearth of existing homes for sale is propelling homebuilders into the limelight despite prevailing market challenges. This trend, as NAHB’s chief economist Robert Dietz suggests, is likely to persist as potential buyers continue to scout for new construction due to limited available housing inventory. Plus, a less-hawkish Fed bode well for the sector.
Auto
First Trust S-Network Future Vehicles & Technology ETF (CARZ - Free Report) – Up 36.2%
The area has been benefitting from the Electric Vehicles (EV) boom. The EV space is thriving with consolidation activities. Plus, Tesla shares have surged this year on AI mania. Motor Vehicle & Parts Dealers sales have also been gaining. The Q1 earnings of the sector has also come in decent (read: 5 Sector ETFs Win on Q1 Earnings Beat).
Losers
Regional Banks
SPDR S&P Regional Banking ETF (KRE - Free Report) – Down 29.3%
iShares U.S. Regional Banks ETF (IAT) – Down 28.9%
The space has been an underperformer in 1H despite some occasional rallies in Q2. Failures of three regional banks from March 2023 have resulted in the crisis in the banking industry (read: Regional Bank ETFs: Value Play or Value Trap?).
Energy
Invesco DWA Energy Momentum ETF (PXI - Free Report) – Down 11.2%
iShares U.S. Oil & Gas Exploration & Production ETF (IEO) – Down 10%
Oil prices slumped about 4% in the second quarter and 12.6% so far this year mainly due to global growth worries. The fall has wreaked havoc in the energy space.
Pharma & Biotech
Range Cancer Therapeutics ETF (CNCR - Free Report) – Down 7.1%
iShares Neuroscience and Healthcare ETF (IBRN) – Down 6.6%
Invesco Dynamic Biotechnology & Genome ETF (PBE) – Down 5.7%
The biotechnology sector is one of the most volatile areas of the stock market. The sector has been beaten-down overall this year. The sector has been suffering due to high inflation and high rates. However, some deal activities in the drug-development industry have led to occasional gains.