5 ETFs Returning 5% or More Last Week

Wall Street slumped last week, with the S&P 500 losing 2%, the Dow Jones shedding 2.3%, the Nasdaq losing 1.8% and the Russell 2000 retreating 4.5%. Less dovish Fed cues for 2025 led to this decline in shares. Although Wall Street dived in mid-week, markets recouped some of the previous losses to close out the week on cooling inflation data.

Let’s delve a little deeper.

Fed Cuts Rates by 0.25%, Signals Fewer Cuts

Markets experienced a sharp sell-off on Dec. 18, 2024 as Fed Chair Jerome Powell explained the central bank’s decision to cut interest rates at a slower pace next year than previously anticipated. The Fed now forecasts two rate cuts in 2025, down from the four anticipated in September.

Investment strategists pointed to a shift in the Fed’s tone, causing uncertainty around the frequency and magnitude of future rate cuts in 2025. The upbeat U.S. GDP report and above-consensus retail sales data also strengthened the Fed’s slightly hawkish view (read: Fed Cuts Rates by 0.25%, Signals Fewer Cuts: ETFs to Play).

U.S. Economy Grows 3.1% in Q3

The U.S. economy expanded at an annual rate of 3.1% from July through September, driven by strong consumer spending and increased exports, according to the Commerce Department’s revised estimate. This marks an acceleration from 3.0% growth in the second quarter, despite high interest rates (read: U.S. Economy Grows 3.1% in Q3: ETFs to Play).

Upbeat Retail Sales

Retail sales in the United States increased by 0.7% in November 2024 from the previous month and 3.8% annually. Economists polled by Reuters had forecast retail sales growing 0.5% on a month-on-month basis. Estimates ranged from a 0.1% dip to a 1.0% surge. The resilience of the labor market, helped by historically low layoffs and strong wage growth, has supported strong consumer spending.

Key Fed Inflation Data Lower-Than-Expected

The PCE price index, the Fed’s preferred inflation gauge, registered an increase of just 0.1% from October and a 2.4% annual rate, both below expectations. Barring food and energy, core PCE also increased 0.1% monthly and was 2.8% higher from a year ago, with both readings being 0.1 percentage point below the forecast. This is a scenario the Fed aims for when considering interest rate cuts.

Against this backdrop, below we highlight a few winning ETFs (exchange-traded funds) that excelled last week.

Winning ETFs of Last Week

iPath Series B S&P 500 VIX Short-Term Futures ETN VXX – Up 13.1%

Stock market volatility index VIX surged 29% last week. The week was characterized by a slew of economic data and the Fed policy meeting. The variations in economic data points and the policy outcome kept the stock market edgy and volatile last week, boosting the performance of the ETF VXX.

ProShares Short Ether ETF SETH – Up 12.2%

Ethereum prices lost 13.7% last week, probably due to hawkish Fed cues. The overall cryptocurrency sector requires an easy money policy to excel. It’s no surprise, Ethereum dropped last week, along with Bitcoin (down 9.1%). As a result, inverse ether ETF SETH surged last week.              

United States Natural Gas Fund LP UNG – Up 11.5%

Cold weather at the year-end often leads to higher demand for heating oil and natural gas. Plus, there may be year-end adjustments to energy reserves. Natural gas prices recently hit the highest level in two years amid concerns of a cold-blast winter in the northern hemisphere. Signs of a lower U.S. supply, as indicated by EIA data, further contributed to the price surge (read: Will Santa Claus Rally Set In for 2024? 4 Best ETF Areas to Explore).

YieldMax Short COIN Option Income Strategy ETF FIAT – Up 10.5%

The YieldMax Short COIN Option Income Strategy ETF is an actively managed exchange-traded fund that seeks current income while providing indirect inverse exposure to the share price of the common stock of Coinbase Global, Inc. The ETF yields 76.39% annually. The FIAT ETF’s high yield help the fund weather sudden market turbulence.

ProShares Short Bitcoin ETF BITI – Up 5.2%

Bitcoin prices pulled back for three consecutive days last week to below $96k on a hawkish Fed outlook. Profit-booking amid recent record highs also triggered an extended pullback. The move boosted the price of BITI.

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