Top ETF Stories of February

Wall Street had a losing February in 2025 due to ongoing geopolitical tensions and looming tariff threats from President Donald Trump as well as tensions in the tech world due to the rise of Chinese AI startup DeepSeek.The Nasdaq shed nearly 5% in February, while the S&P 500 and Dow both dropped around 2%, reflecting investor uncertainty over Trump's planned tariffs took effect from Mar. 4.

Below we highlight top ETF stories of February.

China ETFs Ruled Despite Trade Tensions

Investors had to contend with escalating trade tensions after China vowed to retaliate against Trump’s latest tariff moves. The president announced an additional 10% tariff on Chinese imports set to take effect Tuesday and also pledged to impose new duties on Mexico, Canada, and the European Union. The prospect of an intensifying trade war added to investor anxiety.

But despite trade tensions China ETFs like KraneShares Hang Seng TECH Index ETF KTEC, Invesco China Technology ETF CQQQ and KraneShares CSI China Internet ETF KWEB added in the range of 24% to 29%. These China ETFs surged on the DeepSeek buzz and hopes for policy stimulus (read: DeepSeek Buzz Boosts China Tech ETFs).

Tensed Meeting Between U.S.-Ukraine

Adding to the trade turbulence, an economic agreement between the United States and Ukraine remained unresolved after a heated exchange in the Oval Office between President Trump and Ukrainian President Volodymyr Zelensky. The argument left the negotiations stuck, further clouding the geopolitical outlook.

Mixed Economic Data Points

Meanwhile, economic data offered mixed signals. The Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, cooled to 2.6%, aligning with expectations and easing concerns about inflation. However, consumer spending fell 0.2% in January, missing forecasts of a 0.1% increase and contrasting with December’s 0.8% rise, raising concerns about slowing economic momentum.

Meanwhile, the University of Michigan consumer sentiment index fell to 64.7 in February — a nearly 10% decline — as consumers voiced inflation concerns, particularly due to possible new tariffs. The five-year inflation outlook climbed to 3.5%, the highest since 1995.U.S. existing home sales dropped more than expected to 4.08 million units in January (read: Time for Defensive Sector ETFs?).

As a result, defensive sector ETFs like Consumer Staples Select Sector SPDR Fund XLP added about 4.8% over the past one month (as of Feb. 28, 2025) as against losses recorded by the S&P 500. Low-volatility ETFs like Invesco S&P 500 Low Volatility ETF SPLV also added about 4% over the past one month (as of Feb. 28, 2025).

Cryptocurrency Rout

Meanwhile, the cryptocurrency market continued its slump, with Bitcoin plunging 7% to its lowest level since November, marking a 25% drop from its record high amid a broader crypto sell-off. Ethereum prices lost about 30% in February as cryptocurrencies fell out of investors’ favor. No wonder, inverse ether ETF ProShares Short Ether ETF SETH gained about 27.9% last month. iShares Bitcoin Trust ETF IBIT lost about 16.8% in February.

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This article originally published on Zacks Investment Research (zacks.com).

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