Markets Close Q3 at Record Highs, Defensive Sector ETFs Lead

Broad market ETFs slipped as investors awaited September's jobs report, the China ETF rally loses steam

3 Updates 
Mon, September 30, 2024 At 4:30 PM EDT
Kent Thune | Senior Content Editor |

VNQ, XLV Lead S&P 500 to Close the Quarter at Record High

All three major stock market indices were positive Monday to end the third quarter as the S&P 500 notched a new all-time high, notably without the help of the tech sector.

Top performers of the day were real estate and defensive sectors, health and utilities, as Vanguard Real Estate Index Fund ETF (VNQ) rose 0.8%, the Health Care Select Sector SPDR Fund (XLV) gained 0.7%, and the Utilities Select Sector SPDR Fund (XLU), was up 0.5%.

While the tech sector led the S&P 500 index higher early in the year, XLU surpassed the mega-cap growth segment to become the leading sector year-to-date with a gain of 27% through Sept. 30, compared to 17% for tech, as measured by the Technology Select Sector SPDR Fund (XLK).

Perhaps the resurgence of defensive sectors is a foreboding to a slowing economy in Q4 as investors rotate out of higher-risk areas and into more stable sectors.

XLU vs XLK Fund Comparison - Performance
Mon, September 30, 2024 At 1:17 PM EDT
Kristin Myers | SVP Content/EIC |

Broad Market ETFs Slip as Investors Await Jobs Data

ETFs remained little changed in midday trading Monday as markets awaited September's jobs report. SPY, the SPDR S&P 500 ETF Trust hovered around the flatline, slipping into the red at time of publication. DIA, the SPDR Dow Jones Industrial Average ETF Trust slid a quarter of a percentage point. QQQ, the tech-heavy Invesco QQQ Trust was also in the red, edging .15% downward.

Friday's jobs report will test the markets' recent rally which has seen investors go turn back to riskier trades that had been battered in the run up to rate cuts and the most recent personal consumption expenditures index reading, which saw inflation cooling more than expected. 

Over the past 5 days, QQQ has had more than $3 billion in inflows, while MAGS, the Roundhill Magnificent Seven ETF has raked in nearly $50 million over that same time period.

etf.com

By midday, the China trade had lost steam as many investors turned toward betting against Chinese stocks. YANG, the Direxion Daily FTSE China Bear 3X Shares remained in the green, notching a 2.75% gain. It's counterpart, YINN, the Direxion Daily FTSE China Bull 3X Shares sank the same amount.

KWEB, the KraneShares CSI China Internet ETF, which had started the trading session nearly 5% higher, had cooled to just a half a percentage gain. The largest China ETF, the iShares MSCI China ETF (MCHI) remained in the green, but hovered near the flatline. 

Japan ETFs remained in the green by midday after the news that Japan's incoming Prime Minister Shigeru Ishiba would be calling a snap election.

EWJ, the iShares MSCI Japan ETF edged .70% higher by midday Monday. 

Mon, September 30, 2024 At 11:40 AM EDT
Ron Day | Contributing Editor |

KWEB ETF Jumps 3% as Chinese Markets Have Best Day Since 2008

China ETFs rallied a third day, with Chinese stock markets having their best day in 16 years, as investors bet a government stimulus package unveiled last week will boost the country's sluggish economy.

The KraneShares CSI China Internet ETF (KWEB) surged 3.1%, paring earlier gains, in late morning trading. The iShares Trust - China Large-Cap ETF (FXI) added 0.7% and the iShares MSCI China ETF (MCHI) added 1.7%.

Meanwhile, across the East China Sea, Japanese stocks struggled following the election of prime minister Shigeru Ishiba, who is seen as backing away from a government policy of no new interest rate hikes. The Nikkei stock index fell more than 4%. Despite local markets falling, U.S. ETF investors were more optimistic, with the iShares MSCI Japan ETF (EWJ) adding 0.9% and the Franklin FTSE Japan ETF (FLJP) gaining 0.7%.

U.S. stocks wavered ahead of a speech by Fed Chairman Jerome Powell to the National Association for Business Economics, which yesterday released a survey saying that many members believe a "monetary policy mistake" was the "greatest downside risk to the U.S. economy over the next 12 months."

The SPDR Dow Jones Industrial Average ETF Trust (DIA) lost 0.3% and the broader SPDR S&P 500 ETF Trust (SPY) was unchanged.

 

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