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Wall Street faltered in the first trading week of a historically weak September. The S&P 500 tumbled 4.3%, registering its worst week since March 2023. The Nasdaq Composite Index declined 5.8% for its worst weekly performance since 2022, while the Dow Jones dropped 2.9%. The ongoing fears over an economic slowdown compelled investors to dump riskier assets.
The latest job data shows that the United States created 142,000 jobs in August, lower than the 160,000 economists anticipated. Prior month job growth was also revised lower, indicating signs of continued cooling in the labor market. The market has now priced in a 71% chance that the Fed could cut rates by 25 basis points at its next meeting and just a 29% chance of a 50-basis-point rate cut, according to CME Group FedWatch Tool.
Additionally, the decline in the mega-cap tech stocks took a toll on the stock market. Concerns that big technology companies’ shares, particularly those investing heavily in artificial intelligence (AI), have been overvalued continued to weigh. Further, geopolitical tensions and the looming November elections are also making investors jittery.
Further, the historical underperformance in September added to the woes. September is the only calendar month to average a negative return over the past 98 years, per Fisher Investments. According to Ryan Detrick, chief market strategist at advisory firm Carson Group, September has been the worst-performing month since 1950 (read: 5 ETF Strategies to Survive a Historically Weak September).
The weak stock market performance and the negative sentiments have resulted in investors’ flight to defensive and low-volatility sectors. Given this, we have highlighted three ETFs each from the best and worst-performing zones of last week.
Best ETFs
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) ) – Up 26.1%
Volatility has increased, given the magnitude of the rate cuts by the Fed and the growth concerns. iPath Series B S&P 500 VIX Short-Term Futures ETN focuses on the S&P 500 VIX Short-Term Futures Index, which provides access to equity market volatility through CBOE Volatility Index futures and offers exposure to a daily rolling long position in the first and second-month VIX futures contracts. iPath Series B S&P 500 VIX Short-Term Futures ETN is popular and liquid with AUM of $333.6 million and an average daily volume of 11 million shares. It charges 89 bps in annual fees.
iShares 25+ Year Treasury STRIPS Bond ETF (GOVZ - Free Report) ) — Up 5.2%
Treasuries surge as yields decline. The 10-year U.S. Treasury yields dropped to the lowest since June 2023. iShares 25+ Year Treasury STRIPS Bond ETF offers exposure to U.S. principal STRIPS (Separate Trading of Registered Interest and Principal Securities) with remaining maturities of at least 25 years. It tracks the ICE BofA Long US Treasury Principal STRIPS Index, holding 21 bonds in its basket. iShares 25+ Year Treasury STRIPS Bond ETF has an average maturity of 27.26 years and an effective duration of 26.73 years (read: 5 ETF Strategies to Survive a Historically Weak September).
iShares 25+ Year Treasury STRIPS Bond ETF has amassed $385.1 million in its asset base and charges 10 bps in fees per year. GOVZ trades in an average daily volume of 630,000 shares.
Amid the turbulent stock market, investors are increasingly exploring diversified strategies that help to protect their portfolios from downside risk. Cambria Tail Risk ETF seeks to mitigate significant downside market risk as it invests in a portfolio of "out of the money" put options purchased on the U.S. stock market. The TAIL strategy offers the potential advantage of buying more puts when volatility is low and fewer puts when volatility is high. While a portion of the fund's assets are invested in the basket of long put option premiums, the majority of fund assets are invested in intermediate-term U.S. Treasuries.
Cambria Tail Risk ETF has amassed $78.1 million in its asset base and charges 59 bps in annual fees from investors. It trades in a volume of 61,000 shares a day on average.
Bitcoin fell below a one-month low to $54,000 as uncertainty over potential rate cuts led to heightened market turbulence. Valkyrie Bitcoin Miners ETF is an actively managed ETF available through Nasdaq that invests in public companies in the bitcoin mining industry. Valkyrie Bitcoin Miners ETF holds 20 stocks in its basket. It has amassed $106.7 million in its asset base while trading in an average daily volume of 364,000 shares. WGMI charges 75 bps in annual fees (read: Best Performing ETFs by Sector in the Past 30 Days).
The uranium market has been facing short-term pressure due to supply issues and logistical delays. Sprott Junior Uranium Miners ETF is the only pure-play ETF focused on small uranium miners selected for their potential for significant revenue and asset growth. It follows the Nasdaq Sprott Junior Uranium Miners Index, which is designed to track the performance of mid-, small- and micro-cap companies in uranium-mining-related businesses. It holds 33 stocks in its basket and charges 80 bps in annual fees.
Sprott Junior Uranium Miners ETF has accumulated $235.7 million in its asset base and trades in an average daily volume of 179,000 shares.
Strive U.S. Semiconductor ETF (SHOC - Free Report) ) – Down 12.4%
Semiconductor stocks suffered the biggest weekly decline amid the market rout, with Broadcom (AVGO) and NVIDIA (NVDA) losing the most. Strive U.S. Semiconductor ETF seeks broad market exposure to the U.S. semiconductor sector. It follows the Bloomberg US Listed Semiconductors Select Total Return Index and holds 32 stocks in its basket (read: Pain or Gain Ahead of NVIDIA ETFs?).
Strive U.S. Semiconductor ETF has AUM of $73.7 million and charges 40 bps in annual fees. It trades in a volume of 50,000 shares per day on average and has a Zacks ETF Rank #2 (Buy).
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Top and Flop ETFs of Last Week
Wall Street faltered in the first trading week of a historically weak September. The S&P 500 tumbled 4.3%, registering its worst week since March 2023. The Nasdaq Composite Index declined 5.8% for its worst weekly performance since 2022, while the Dow Jones dropped 2.9%. The ongoing fears over an economic slowdown compelled investors to dump riskier assets.
The latest job data shows that the United States created 142,000 jobs in August, lower than the 160,000 economists anticipated. Prior month job growth was also revised lower, indicating signs of continued cooling in the labor market. The market has now priced in a 71% chance that the Fed could cut rates by 25 basis points at its next meeting and just a 29% chance of a 50-basis-point rate cut, according to CME Group FedWatch Tool.
Additionally, the decline in the mega-cap tech stocks took a toll on the stock market. Concerns that big technology companies’ shares, particularly those investing heavily in artificial intelligence (AI), have been overvalued continued to weigh. Further, geopolitical tensions and the looming November elections are also making investors jittery.
Further, the historical underperformance in September added to the woes. September is the only calendar month to average a negative return over the past 98 years, per Fisher Investments. According to Ryan Detrick, chief market strategist at advisory firm Carson Group, September has been the worst-performing month since 1950 (read: 5 ETF Strategies to Survive a Historically Weak September).
The weak stock market performance and the negative sentiments have resulted in investors’ flight to defensive and low-volatility sectors. Given this, we have highlighted three ETFs each from the best and worst-performing zones of last week.
Best ETFs
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) ) – Up 26.1%
Volatility has increased, given the magnitude of the rate cuts by the Fed and the growth concerns. iPath Series B S&P 500 VIX Short-Term Futures ETN focuses on the S&P 500 VIX Short-Term Futures Index, which provides access to equity market volatility through CBOE Volatility Index futures and offers exposure to a daily rolling long position in the first and second-month VIX futures contracts. iPath Series B S&P 500 VIX Short-Term Futures ETN is popular and liquid with AUM of $333.6 million and an average daily volume of 11 million shares. It charges 89 bps in annual fees.
iShares 25+ Year Treasury STRIPS Bond ETF (GOVZ - Free Report) ) — Up 5.2%
Treasuries surge as yields decline. The 10-year U.S. Treasury yields dropped to the lowest since June 2023. iShares 25+ Year Treasury STRIPS Bond ETF offers exposure to U.S. principal STRIPS (Separate Trading of Registered Interest and Principal Securities) with remaining maturities of at least 25 years. It tracks the ICE BofA Long US Treasury Principal STRIPS Index, holding 21 bonds in its basket. iShares 25+ Year Treasury STRIPS Bond ETF has an average maturity of 27.26 years and an effective duration of 26.73 years (read: 5 ETF Strategies to Survive a Historically Weak September).
iShares 25+ Year Treasury STRIPS Bond ETF has amassed $385.1 million in its asset base and charges 10 bps in fees per year. GOVZ trades in an average daily volume of 630,000 shares.
Cambria Tail Risk ETF (TAIL) ) – Up 5%
Amid the turbulent stock market, investors are increasingly exploring diversified strategies that help to protect their portfolios from downside risk. Cambria Tail Risk ETF seeks to mitigate significant downside market risk as it invests in a portfolio of "out of the money" put options purchased on the U.S. stock market. The TAIL strategy offers the potential advantage of buying more puts when volatility is low and fewer puts when volatility is high. While a portion of the fund's assets are invested in the basket of long put option premiums, the majority of fund assets are invested in intermediate-term U.S. Treasuries.
Cambria Tail Risk ETF has amassed $78.1 million in its asset base and charges 59 bps in annual fees from investors. It trades in a volume of 61,000 shares a day on average.
Worst ETFs
Valkyrie Bitcoin Miners ETF (WGMI) ) – Down 15.8%
Bitcoin fell below a one-month low to $54,000 as uncertainty over potential rate cuts led to heightened market turbulence. Valkyrie Bitcoin Miners ETF is an actively managed ETF available through Nasdaq that invests in public companies in the bitcoin mining industry. Valkyrie Bitcoin Miners ETF holds 20 stocks in its basket. It has amassed $106.7 million in its asset base while trading in an average daily volume of 364,000 shares. WGMI charges 75 bps in annual fees (read: Best Performing ETFs by Sector in the Past 30 Days).
Sprott Junior Uranium Miners ETF (URNJ - Free Report) ) – Down 14.7%
The uranium market has been facing short-term pressure due to supply issues and logistical delays. Sprott Junior Uranium Miners ETF is the only pure-play ETF focused on small uranium miners selected for their potential for significant revenue and asset growth. It follows the Nasdaq Sprott Junior Uranium Miners Index, which is designed to track the performance of mid-, small- and micro-cap companies in uranium-mining-related businesses. It holds 33 stocks in its basket and charges 80 bps in annual fees.
Sprott Junior Uranium Miners ETF has accumulated $235.7 million in its asset base and trades in an average daily volume of 179,000 shares.
Strive U.S. Semiconductor ETF (SHOC - Free Report) ) – Down 12.4%
Semiconductor stocks suffered the biggest weekly decline amid the market rout, with Broadcom (AVGO) and NVIDIA (NVDA) losing the most. Strive U.S. Semiconductor ETF seeks broad market exposure to the U.S. semiconductor sector. It follows the Bloomberg US Listed Semiconductors Select Total Return Index and holds 32 stocks in its basket (read: Pain or Gain Ahead of NVIDIA ETFs?).
Strive U.S. Semiconductor ETF has AUM of $73.7 million and charges 40 bps in annual fees. It trades in a volume of 50,000 shares per day on average and has a Zacks ETF Rank #2 (Buy).