ETFs Rebound as Investors Bet on Rate Cuts

The SPDR Dow Jones Industrial Average ETF Trust (DIA) and SPDR S&P 500 ETF Trust (SPY) both jumped over 1.1% on Monday, rebounding from last week's losses. 

The tech-heavy Invesco QQQ Trust (QQQ) gained 1.3% as investors anticipated a potential Federal Reserve rate cut. 

The REX AI Equity Premium Income ETF (AIPI) surged nearly 2% after Palantir Technologies, a key holding, soared 13% on news of its addition to the S&P 500. 

The Innovator Loup Frontier Tech ETF (LOUP) climbed 1.5%, boosted by Dell Technologies' 4% gain following its S&P 500 inclusion. Airline-focused ETFs saw positive performance. 

The U.S. Global Jets ETF (JETS) increased 2.6% as JetBlue Airways rose 7.2% after an analyst upgrade and improved revenue estimates. 

The Themes ETF Trust - Themes Airlines ETF (AIRL) inched up 0.3% on the news.

 The First Trust Indxx Aerospace & Defense ETF (MISL) advanced 1.6%, propelled by Boeing’s 4% jump. The aircraft maker reached a deal with factory workers, potentially averting a costly strike.

Monday’s equity market rally continues to shake off the nerves of last week, pushing S&P 500, the Dow and the Nasdaq all up more than 1.3% in midday trading.

The key driver was the long-awaited pivot in monetary policy as the Federal Reserve is expected to introduce its first interest rate cut this week since March 2020.

Sectors leading the charge Monday were industrials, financials and consumer discretionary.

The Industrial Select Sector SPDR Fund (XLI) was up 1.9% in midday trading. The Financial Select Sector SPDR Fund (XLF) was up 2%. And the Consumer Discretionary Select SPDR Fund (XLY) was up 1.8%.

Markets rebounded ahead of Wednesday's consumer price index (CPI) report as inflation returns to investors' radars. 

Semiconductor and tech ETFs jumped, partially retracing last week's losses when investors backed away from chipmakers including Nvidia and Broadcom and pushed the SPDR S&P 500 ETF Trust (SPY) 4.1% lower. SOXX, the iShares Semiconductor ETF jumped 1.5% at noon New York time while SHOC, the Strive U.S. Semiconductor ETF rose 1.2%.

The consumer discretionary sector, dominated by tech stocks, also rose. XLY, the Consumer Discretionary Select Sector SPDR Fund rose 1.7%. The fund's largest allocations are in Amazon and Tesla. 

Tech ETFs also edged higher Monday. MAGS, the Roundhill Magnificent Seven ETF rose 1%. XLK, the Technology Select Sector SPDR Fund also jumped, notching a 1.3% gain. 

In broader markets, SPY added 1.1% while DIA, the SPDR Dow Jones Industrial Average ETF Trust gained 1.4%. 

The defensive trade lost steam, rising less than other market sectors, as investor appetites for risk grew. XLU, the Utilities Select Sector SPDR Fund rose by 0.5% Monday, while XLP, the Consumer Staples Select Sector SPDR Fund jumped 0.8%.