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Wall Street delivered a downbeat performance last week. The S&P 500 (down 0.13%), the Dow Jones (down 0.02%) and the Nasdaq (down 0.7%) – all three key U.S. equity gauges were in the red. The hot inflation reading and the chances of higher-for-longer interest rates weighed on the broader market.
The consumer price index, a broad measure of goods and services costs, rose 0.4% sequentially in February and 3.2% year over year. The monthly gain was in line with expectations, but the annual rate was slightly ahead of the 3.1% forecast from the Dow Jones consensus.
No wonder the benchmark 10-year U.S. treasury yield jumped to 4.31% on Mar 15, 2024, from 4.10% recorded on Mar 11, 2024. The two-year U.S. treasury yield, too, jumped by 19 bps to 4.72% during this timeframe.
The Fed is due to meet on Mar 20, 2024, and the rates are likely to remain the same this month. If this was not enough, U.S. Treasury Secretary Janet Yellen said that it's “unlikely” that interest rates will return to the pre-pandemic levels.
The key selling season for homebuyers – Spring – may freeze out this year as higher mortgage rates, lack of affordability and higher home prices may retard would-be buyers from entering the housing market. Mortgage rates have largely been on the rise this year, peaking around 7% in mid-February.
Against this backdrop, below we highlight a few winning ETFs of last week.
AdvisorShares Pure US Cannabis ETF (MSOS - Free Report) ) – Up 9.5%
Cannabis stocks & ETFs jumped last week after a prominent hedge fund manager suggested that regulators will soon reclassify marijuana as a less dangerous drug. Cannabis stocks have been in a solid shape since last few weeks. Germany took a huge step toward the broad legalization in Europe. Germany could become the largest country in Europe to legalize cannabis in 2024.
German lawmakers approved a government plan to liberalize rules on cannabis, paving the way for the country to decriminalize limited amounts of marijuana and allow members of “cannabis clubs” to buy it for recreational purposes, and the move would take effect from April 1.
Copper prices soared to an 11-month high last week following an agreement by Chinese smelters to cut production. These smelters are responsible for processing half of the global copper supply. The market is expecting a copper price rally which is why prices are up over 8% since touching the multi-month low in mid-October, per barrons.com. China, the major buyer of copper, has also released about $140 billion of monetary stimulus to boost the economic growth. This, in turn, should boost copper consumption too (read: Copper Minig ETFs at All-Time Highs: Here's Why).
Energy
United States Gasoline Fund LP (UGA - Free Report) ) – Up 7.3%
The oil price rally continued after the IEA warned that supply would lag this year and U.S. stockpiles fell. WTI crude futures traded just above $81 per barrel and touched their highest levels since November, while Brent crude futures rose to above $85 (read: 5 Low-Risk ETFs to Play Now as Inflation Ticks Up).
Green metals play a key role in creating low carbon technologies, like electric cars, which require more than 120 kilograms of these metals.And importantly, green metals can be recycled again and again.So, these same metals can have multiple usages and could go from a phone to a computer, to a plane and more. With the fight against global warming gaining momentum, low carbon technologies are becoming popular. This puts focus on the green metal rally.
In reflection of the sticky inflation data, the benchmark 10-year U.S. treasury yield jumped last week. The Fed is due to meet on Mar 20, 2024, and the rates are likely to remain the same this month. At the current level, there is a 55.2% chance of a 25-bp rate cut in June, per the CME FedWatch Tool. Against this scenario, ETFs that offer protection from higher rates should be in vogue. As a result, PFIX gained last week (read: ETF Strategies to Play Hot inflation Data).
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5 Best ETF Areas of Last Week
Wall Street delivered a downbeat performance last week. The S&P 500 (down 0.13%), the Dow Jones (down 0.02%) and the Nasdaq (down 0.7%) – all three key U.S. equity gauges were in the red. The hot inflation reading and the chances of higher-for-longer interest rates weighed on the broader market.
The consumer price index, a broad measure of goods and services costs, rose 0.4% sequentially in February and 3.2% year over year. The monthly gain was in line with expectations, but the annual rate was slightly ahead of the 3.1% forecast from the Dow Jones consensus.
No wonder the benchmark 10-year U.S. treasury yield jumped to 4.31% on Mar 15, 2024, from 4.10% recorded on Mar 11, 2024. The two-year U.S. treasury yield, too, jumped by 19 bps to 4.72% during this timeframe.
The Fed is due to meet on Mar 20, 2024, and the rates are likely to remain the same this month. If this was not enough, U.S. Treasury Secretary Janet Yellen said that it's “unlikely” that interest rates will return to the pre-pandemic levels.
The key selling season for homebuyers – Spring – may freeze out this year as higher mortgage rates, lack of affordability and higher home prices may retard would-be buyers from entering the housing market. Mortgage rates have largely been on the rise this year, peaking around 7% in mid-February.
Against this backdrop, below we highlight a few winning ETFs of last week.
ETFs in Focus
Cannabis
Roundhill Cannabis ETF (WEED - Free Report) ) – Up 11.7%
AdvisorShares Pure US Cannabis ETF (MSOS - Free Report) ) – Up 9.5%
Cannabis stocks & ETFs jumped last week after a prominent hedge fund manager suggested that regulators will soon reclassify marijuana as a less dangerous drug. Cannabis stocks have been in a solid shape since last few weeks. Germany took a huge step toward the broad legalization in Europe. Germany could become the largest country in Europe to legalize cannabis in 2024.
German lawmakers approved a government plan to liberalize rules on cannabis, paving the way for the country to decriminalize limited amounts of marijuana and allow members of “cannabis clubs” to buy it for recreational purposes, and the move would take effect from April 1.
Copper Miner
Sprott Copper Miners ETF (COPP - Free Report) ) – Up 11.5%
Sprott Junior Copper Miners ETF (COPJ - Free Report) ) – Up 9.8%
Copper prices soared to an 11-month high last week following an agreement by Chinese smelters to cut production. These smelters are responsible for processing half of the global copper supply. The market is expecting a copper price rally which is why prices are up over 8% since touching the multi-month low in mid-October, per barrons.com. China, the major buyer of copper, has also released about $140 billion of monetary stimulus to boost the economic growth. This, in turn, should boost copper consumption too (read: Copper Minig ETFs at All-Time Highs: Here's Why).
Energy
United States Gasoline Fund LP (UGA - Free Report) ) – Up 7.3%
The oil price rally continued after the IEA warned that supply would lag this year and U.S. stockpiles fell. WTI crude futures traded just above $81 per barrel and touched their highest levels since November, while Brent crude futures rose to above $85 (read: 5 Low-Risk ETFs to Play Now as Inflation Ticks Up).
Green Metals
VanEck Green Metals ETF (GMET - Free Report) ) – Up 7.2%
Green metals play a key role in creating low carbon technologies, like electric cars, which require more than 120 kilograms of these metals.And importantly, green metals can be recycled again and again.So, these same metals can have multiple usages and could go from a phone to a computer, to a plane and more. With the fight against global warming gaining momentum, low carbon technologies are becoming popular. This puts focus on the green metal rally.
Interest Rate Fighting ETFs
Simplify Interest Rate Hedge ETF (PFIX - Free Report) ) – Up 6.8%
In reflection of the sticky inflation data, the benchmark 10-year U.S. treasury yield jumped last week. The Fed is due to meet on Mar 20, 2024, and the rates are likely to remain the same this month. At the current level, there is a 55.2% chance of a 25-bp rate cut in June, per the CME FedWatch Tool. Against this scenario, ETFs that offer protection from higher rates should be in vogue. As a result, PFIX gained last week (read: ETF Strategies to Play Hot inflation Data).