Wall Street wrapped up the last week with mixed performances. The Dow Jones industrial Average inched up 0.3% while the other two benchmarks fell. The S&P 500 Index slid 0.3% — its second consecutive week of decline — while the Nasdaq Composite Index dropped 0.7%.
The decline came on the back of a series of negative news on the U.S. credit rating downgrade and multiple bank downgrades. The inflation data also added to the woes.
Fitch Ratings downgraded the U.S. credit rating to AA+ from AAA, citing “expected fiscal deterioration over the next three years,” an erosion of governance and a growing general debt burden. This led to a strong sell-off in the stocks and a surge in yields. Meanwhile, ratings agency Moody's downgraded the credit ratings of several small to mid-sized U.S. banks and warned that it may downgrade some of the nation's biggest lenders too, citing a looming mild recession, higher interest rates and increased funding costs.
Inflation in the United States rose for the first time in July after 12 straight months of decline. The Consumer Price Index rose 3.2% year over year, up from an annual increase of 3% in June, which was the lowest rate in over two years (read: Inflation Moderates in July: ETFs to Gain).
The underperformance in the tech-heavy Nasdaq Index was due to concerns that interest rates could rise further. As the tech sector relies on easy borrowing for superior growth and its value depends heavily on future earnings, a rise in rates lowers the present value of companies’ future earnings, sparking fears of overvaluation.
While most of the sector lost last week, few eked out gains. In particular, the pharma and energy sectors were the biggest winners last week. Pharma stocks were driven by Eli Lilly’s (LLY) significant surge in stock prices in over two decades following the release of an impressive second-quarter 2023 earnings report and an optimistic outlook. Meanwhile, the energy sector rose on an oil price surge. A tightening oil market fueled by surging crude demand and supply reductions by major OPEC+ players — Saudi Arabia and Russia — are driving oil price higher (read: Oil Price at 2023 High: Make Profits With Leveraged ETFs).
We have highlighted one ETF from different sectors that were in green last week. These include Sprott Junior Uranium Miners ETF (URNJ - Free Report) , iShares U.S. Pharmaceuticals ETF (IHE - Free Report) and Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) .
ETFs That Gained
We have profiled the above-mentioned ETFs in detail below:Sprott Junior Uranium Miners ETF (URNJ - Free Report) – Up 6.3%
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 tracks 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. Sprott Junior Uranium Miners ETF holds 29 stocks in its basket and charges 80 bps in annual fees.
Sprott Junior Uranium Miners ETF has accumulated $39.9 million in its asset base and trades in average daily volume of 59,000 shares.
iShares U.S. Pharmaceuticals ETF (IHE - Free Report) – Up 5.6%
iShares U.S. Pharmaceuticals ETF provides exposure to 39 U.S. companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index (read: Eli Lilly Soars on Blockbuster Q2 Earnings: ETFs to Tap).
iShares U.S. Pharmaceuticals ETF has $388.9 million in AUM and charges 40 bps in fees and expense. Volume is light as it exchanges about 6,000 shares a day. The fund carries a Zacks ETF Rank #3 (Hold) with a High risk outlook.
Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) – Up 3.8%
Invesco Dynamic Energy Exploration & Production ETF follows the Dynamic Energy Exploration & Production Intellidex Index, which thoroughly evaluates companies involved in the exploration and production of natural resources used to produce energy based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value.
Holding 31 stocks in its basket, Invesco Dynamic Energy Exploration & Production ETF has amassed $167.8 million in its asset base and charges 63 bps in annual fees. It trades in a volume of 51,000 shares and has a Zacks ETF Rank #3.
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