ETFs Dip After Rally; GOOX Gains on Google Deal

Markets took a breather on Tuesday, with major ETFs closing slightly lower after their longest rally this year. Investors remain optimistic about potential rate cuts from the Federal Reserve. 

SPDR S&P 500 ETF Trust (SPY), Invesco QQQ Trust (QQQ) and SPDR Dow Jones Industrial Average ETF Trust (DIA) all closed about 0.1% lower. 

The T-Rex 2X Long Alphabet Daily Target ETF (GOOX) closed nearly 1.5% higher after Energix Renewables announced a long-term agreement to supply Google with electricity and renewable energy credits for AI data centers. Additionally, Alphabet’s Waymo reported doubling its weekly paid robotaxi rides to over 100,000 in the U.S. since May. 

Aerospace and defense ETFs showed mixed performance following Boeing’s 4.3% drop after grounding its 777X test fleet due to structural issues. iShares U.S. Aerospace & Defense ETF (ITA) an First Trust Indxxd  Aerospace & Defense ETF (MISL) closed about 1% lower, while Gabelli Commercial Aerospace and Defense ETF (GCAD) edged up 0.3%. 

Themes ETF Trust - Themes Airlines ETF (AIRL) closed 0.1% higher after the U.S. Department of Justice cleared the $1.9 billion merger between Hawaiian Holdings and Alaska Air. Hawaiian shares surged 11.6%, while Alaska Airlines rose 0.3%. The airlines still need secure approval from the U.S. Department of Transportation before the deal can close.

Global markets slipped after eight days of advances while investors await a speech from Fed Chair Jay Powell from the Jackson Hole Conference. 

According to etf.com data, traders made some of the biggest bets against China, sending YANG, the Direxion Daily FTSE China Bear 3X Shares 6.2% higher at noon on Tuesday. 

Global markets were broadly in the red by the time U.S. exchanges opened with Chinese exchanges leading the way lower. GXC, the SPDR S&P China ETF sank nearly 2%. A proxy for Hong Kong, EWH, the IShares MSCI Hong Kong ETF dropped 1.5%.

ETFs betting on the rising price of Chinese companies suffered Tuesday from the breather. CWEB, the Direxion Daily CSI China Internet Index Bull 2X Shares slipped over 7%, one of the biggest fund losers, according to etf.com data. Similarly, YINN, the Direxion Daily FTSE China Bull 3X Shares dropped more than 6%. 

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While it's largely presumed that the Fed will deliver a rate cut next month at the central bank's policy meeting, questions still remain on how large the cut will be. According to the CME Fed Watch Tool, investors are forecasting a nearly 74% chance that the Fed will deliver a 25-basis point cut. 

European and British ETFs also dropped Tuesday in advance of Powell's remarks on Friday. 

IEV, the iShares Europe ETF slipped a quarter of a percentage point while EWU, the iShares MSCI United Kingdom ETF fell 0.6%. 

American markets also joined their global counterparts in the red. DIA, the SPDR Dow Jones Industrial Average ETF Trust and SPY, the SPDR S&P 500 ETF Trust both lost 0.3%. QQQ, the tech-heavy Invesco QQQ Trust dropped about the same.