Last week, Wall Street snapped its nine-week win streak, marking the end of their longest consecutive weekly run in the green since 2004. The Dow Jones and the S&P 500 had their worst start this year since 2016, per a Yahoo Finance article. The S&P 500 was off 1.5%, the Dow Jones was down 0.6% and the Nasdaq Composite lost about 0.6% last week.

Investors' optimism has waned due to stretched valuations and the uncertainty surrounding the timing of the Fed's rate cuts. Consequently, they are now more inclined to investigate diversified approaches that can safeguard their portfolios against potential losses.

The latest Fed minutes show that it wouldn’t cut rates as aggressively as expected for this year.The United States witnessed an addition of 216,000 new jobs in December 2023, surpassing projections of a decline from the previous month.

This triggered the fears about no imminent rate cuts as the economy seems to be on the solid footing. There is also a rising concern about the risks that an “overly restrictive” monetary policy may pose to the economy.

The disappointing manufacturing data also added to the chaos. The U.S. manufacturing sector slipped further into contraction during December, according to the latest PMI data from S&P Global, as output declined and the downturn in new orders gathered pace.

iPhone maker Apple (AAPL) is also facing difficulties at the start of the New Year, as its stock value dropped to the lowest point in eight weeks. This decline followed downgrades from two analysts, Piper Sandler and Barclays, who expressed concerns over the demand for iPhones.

Against this backdrop, below we highlight a few winning ETFs of last week.

ETFs in Focus

Natural Gas

United States Natural Gas Fund LP (UNG Quick QuoteUNG - Free Report) ) – Up 15.2%

Weather forecasts for mid-January are predicting colder temperatures and the likelihood of winter storms throughout the United States, which may lead to an increase in natural gas demand as it would boost the heating demand. While this acted as a positive for the space, gains were restricted slightly by a smaller-than-expected storage draw of 14 billion cubic feet in the EIA’s weekly storage report.

Marijuana

AdvisorShares Pure US Cannabis ETF (MSOS Quick QuoteMSOS - Free Report) ) – Up 12.8%

Marijuana stocks spiked following the report that the US Drug Enforcement Administration (“DEA”) is reviewing the potential reclassification of cannabis from Schedule I to Schedule III. This development, initiated by a recommendation from the Department of Health and Human Services (HHS), could lead to substantial federal benefits for the U.S. cannabis industry if it goes through (read: Cannabis ETFs Spike on Marijuana Classification Review).

Interest-Rate-Hedged

Simplify Interest Rate Hedge ETF (PFIX Quick QuotePFIX - Free Report) ) – Up 10.1%

U.S. treasury yields jumped following better-than-expected jobs data. As of Jan 5, 2024, benchmark U.S. treasury yield jumped to 4.05% from 3.95% at the start of the week, which, in fact, dropped to 3.91% on the closing of Jan 3, 2024. As a result, ETFs that safeguard investors from higher rates surged.

Shipping

SonicShares Global Shipping ETF (BOAT Quick QuoteBOAT - Free Report) ) – Up 7.8%

Shipping ETFs extended rally as ocean carriers remain on edge amid Houthi militant attacks in Red Sea. Last week, Iran’s Alborz warship has entered the Red Sea through the strategic Bab el-Mandeb strait, amid heightened tensions in the globally important strategic waterway. 

Inverse ETFs

AdvisorShares Ranger Equity Bear ETF (HDGE Quick QuoteHDGE - Free Report) ) – Up 4.6%

As the U.S. stock market started to falter to start 2024 due to renewed rising rate worries, inverse or bear ETFs started to gain. Investors’ enthusiasm over the Fed rate cuts also faded, reflecting concerns about the skyrocketing market after a sharp rally over the past two months (read: Inverse ETFs Soar at the Start of 2024).