U.S. stock indices closed last week on a solid note as investors reacted to a favorable inflation report. The Dow Jones Industrial Average hit a new record. The S&P 500 advanced 0.6%, the Dow Jones added 0.6% and the Nasdaq Composite gained about 1% last week. Investor sentiment improved as confidence in the U.S. economy strengthened.
A robust GDP report and easing inflation fueled optimism. The Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation measure, showed a 0.1% month-over-month increase in the core PCE, undershooting Wall Street's expectations. This contributed to the growing belief that the Fed could achieve a "soft landing" as it begins to cut interest rates.
Rate Cut Bets Grow
Following the PCE data, traders boosted their expectations for a solid interest rate cut next month. Around 52% of market participants now anticipate (at the time of writing) a 50-basis point cut, indicating the market’s confidence in the Fed’s approach to monetary policy.
U.S. Economy Grows Faster Than Expected in Q2
The U.S. economy grew at an annualized rate of 3% in the second quarter of the year, surpassing Wall Street's expectations. According to the Bureau of Economic Analysis's third estimate, this growth rate remained unchanged from the previous estimate. Economists had estimated the reading to show an annualized growth of 2.9%. The second-quarter growth marks a significant improvement from the 1.4% annualized growth seen in the first quarter (read: 4 Reasons to Buy Small-Cap ETFs Now).
Chinese Stimulus Fuels Global Markets
On Sept. 24, 2024, China's central bank, the People’s Bank of China (PBOC), announced a broad range of monetary stimulus measures aimed at boosting the world's second-largest economy. This move indicates growing concerns within Xi Jinping's administration over the nation’s slowing growth and declining investor confidence.
China's stimulus efforts boosted global markets, with mainland stocks notching their biggest weekly win since 2008. Shares of Alibaba BABA, JD.com JD and Meituan jumped as investors showed renewed interest in Chinese equities (read: A Few Reasons to Buy China ETFs Now).
Semiconductor Stocks See Mixed Performance
Chipmakers registered varying performances last week. Micron MU stock fell 2.2% on Friday, despite a strong performance earlier in the week following an upbeat quarterly outlook driven by AI demand.
NVIDIA NVDA shares also came under pressure in the final leg of the week due to news that AI server maker Super Micro Computer SMCI, a major Nvidia customer, was under investigation by the Department of Justice for alleged accounting violations. Additionally, reports suggested that China was encouraging domestic firms to purchase AI chips locally instead of from NVIDIA.
Winning Leveraged ETFs in Focus
Against this backdrop, below we highlight a few winning ETFs of last week.
VanEck ChiNext ETF CNXT – Up 27.2% last week
Global X MSCI China Consumer Discretionary ETF CHIQ – Up 24.1%
iShares Lithium Miners and Producers ETF ILIT – Up 20.3%
First Trust Dow Jones International Internet ETF FDNI – Up 17.4%
Sprott Junior Uranium Miners ETF URNJ – Up 16.1%
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Micron Technology, Inc. (MU): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
VanEck ChiNext ETF (CNXT): ETF Research Reports
Super Micro Computer, Inc. (SMCI): Free Stock Analysis Report
JD.com, Inc. (JD): Free Stock Analysis Report
Alibaba Group Holding Limited (BABA): Free Stock Analysis Report
Global X MSCI China Consumer Discretionary ETF (CHIQ): ETF Research Reports
First Trust Dow Jones International Internet ETF (FDNI): ETF Research Reports
Sprott Junior Uranium Miners ETF (URNJ): ETF Research Reports
iShares Lithium Miners and Producers ETF (ILIT): ETF Research Reports
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