Travelers' Results Boost Financial ETFs as Bond Funds Dip

Stock indexes neared closing records again as Travelers Cos. Inc. rose on third-quarter results that beat estimates and Taiwan Semiconductor Manufacturing Company Ltd. gained after raising its profit outlook while topping analysts' profit and sales estimates.

At the same time, a solid retail sales report dimmed the prospects for aggressive rate hikes, pushing treasuries lower and driving down fixed income ETFs.

The Invesco KBW Property & Casualty Insurance ETF (KBWP) jumped 1.5% in afternoon trading, adding to its 37% gain over the past year. That fund has an 8.3% allocation to Travelers, whose stock gained 8% after reporting so-called core earnings that crushed analysts' expectations.

ETFs holding chips jumped after Taiwan Semi's earnings report. The VanEck Semiconductor ETF (SMH) popped 2.7% while the ProShares Ultra Semiconductors (USD) leapt 4.3%.

Broad markets also rose. QQQ, the tech-heavy Invesco QQQ Trust rose 0.4% while SPY, the SPDR S&P 500 ETF Trust edged more than 0.2% higher. DIA, the SPDR Dow Jones Industrial Average ETF Trust jumped 0.3%.

September retail sales rose 0.4%, beating the 0.3% forecast from economists surveyed by The Wall Street Journal. Treasuries sank on the unexpected growth, and the iShares 20+ Year Treasury Bond ETF (TLT) lost 1.7% and the Vanguard Total Bond Market ETF (BND) lost 0.5%.

Bottom fixed income performers 1 month

Chipmaker Taiwan Semiconductor Manufacturing Company Ltd. (TSM) raised its profit outlook while beating analysts' expectations for profit and sales. 

The earnings beat boosted semiconductor ETFs as investors continued to bet on AI. TSM jumped 13% on the news. Chip maker Nvidia also jumped in sympathy, climbing more than 3%. 

ETFs holding chips soared in early trading on Thursday. SMH, the VanEck Semiconductor ETF popped 3% Thursday. Both NVDA and TSM account for more than 30% of the fund. USD, the ProShares Ultra Semiconductors, leapt 4%.

Semiconductors have been on a rollercoaster as investors are anxious about the growth potential of AI and the chipmakers that would make the technology possible. While SMH is up over 41% this year, it's dropped nearly 10% over the past 3 months. According to the etf.com Pulse Tool, the fund is one of the top 10 best performing equity funds so far this year. 

Year-to-date gains

Source: ETF Pulse

SHOC, the Strive U.S. Semiconductor ETF jumped 1.3%. Chipmaking giant Nvidia is nearly a quarter of the fund. The ETF has seen losses in excess of 12% over the past 3 months. SOXX, the iShares Semiconductor ETF notched a 2% gain Thursday. 

Broad markets also rose. QQQ, the tech-heavy Invesco QQQ Trust rose more than a third of a percentage point, while SPY, the SPDR S&P 500 ETF Trust edged more than .10% higher. DIA, the SPDR Dow Jones Industrial Average ETF Trust jumped a quarter of a percentage point.