ETFs Mixed as Steel Slumps, Telecom Surges

U.S. metals and mining ETFs declined Wednesday following news that the White House may block U.S. Steel’s sale to Nippon Steel. The VanEck Steel ETF (SLX) and SPDR S&P Metals & Mining ETF (XME) both fell 0.8%, while the First Trust Materials AlphaDEX Fund (FXZ) dropped 1%. 

Telecom ETFs, however, saw some gains. The SPDR S&P Telecom ETF (XTL) surged 3.1%, while the Invesco S&P 500 Equal Weight Communication Services ETF (RSPC) rose 1.3%. These gains were driven by Frontier Communications, whose shares jumped nearly 39% on reports of advance acquisition talks with Verizon. 

Retail-focused ETFs faced pressure, with the Neuberger Berman Next Generation Connected Consumer ETF (NBCC) falling 1.5%. 

This decline came after Dollar Tree shares plummeted by nearly 23% following disappointing second-quarter earnings and reduced full-year 2024 guidance. The SPDR Dow Jones Industrial Average ETF Trust (DIA) was the only major index ETF to end the day in positive territory, edging up 0.06%.

Afternoon trading continued yesterday's malaise as the stock market returned the day's early gains while bond ETFs and volatility ticked higher.

Nvidia stock jumped 3% from the market's open to late morning trading but had fallen to barely above zero by mid-afternoon.

Meanwhile, the ProShares VIX Short-Term Futures ETF (VIXY) added to yesterday's 20% gain rising another 1.6% as the increase by the ETF tracking "The VIX" indicated that fear remains elevated among the investor herd.

TLT Gains on Jobs Report

This morning's jobs report revealed that July's job openings rate dipped to 4.6% from 4.9% in June, reinforcing the current narrative of a cooling labor market and slowing economy.

The bond market proxy, the iShares 20+ Year Treasury Bond ETF (TLT) was up 1% in afternoon trading as bond ETF investors bet on falling rates, which generally move in the opposite direction as interest rates.

Friday's jobs report will provide more clues about the condition of the U.S. labor market and how much the Federal Open Market Committee may cut its funds rate at its Sept. 17-18 meeting.

A sell-off of chipmaker Nvidia reversed course Wednesday, as investors put aside for now concerns about the company's growth potential. 

The AI semiconductor designer, which has at times led the markets higher, had slid to kick of the trading day. In midmorning trading, Nvidia had added 1.3% and was pulling semiconductor ETFs higher.

USD, the ProShares Ultra Semiconductors jumped 1.8%. With over 31% of the ETF allocated to Nvidia, it is second only to the T-Rex 2X Long NVIDIA Daily Target ETF (NVDX) in the size of its Nvidia allocation. NVDX was 1.3% higher, paring earlier gains.

Other semiconductor ETFs also stayed in the green Wednesday. SHOC, the Strive U.S. Semiconductor ETF added about 0.2% higher while SOXX, the IShares Semiconductor ETF jumped 0.8%.

Broad markets also clawed back losses Wednesday. SPY, the SPDR S&P 500 ETF Trust notched less than a full percentage point gain. QQQ, the tech-heavy Invesco QQQ Trust was little-changed, paring earlier gains.

DIA, the SPDR Dow Jones Industrial Average ETF Trust eked out a 0.1% gain. 

Consumer staples and utilities also continued to perform well as investors piled into defensive trades. XLU, the Utilities Select Sector SPDR Fund jumped 1%.