Cybersecurity ETFs Rise as Tech Rally Fades

Despite an earlier rally, markets lost momentum by midday Wednesday. While tech ETFs turned negative after leading initial gains, cybersecurity ETFs showed strength. Global X Cybersecurity ETF (BUG) rose 1.6%, while Amplify Cybersecurity ETF (HACK) gained 0.8%. 

The Burney U.S. Factor Rotation ETF (BRNY) and the Pacer US Cash Cows Growth ETF (BUL) had increases of 1% and 0.2% respectively. 

Fortinet’s strong second-quarter report and upbeat guidance drove the cybersecurity surge, with the stock closing at 14.1% to lead the S&P 500 advancers on Wednesday. 

Internet and FinTech ETFs also performed well, with the Bitwise Web3 ETF (BWEB) up 2.5% and First Trust Dow Jones International Internet ETF (FDNI) gaining 1.6%. 

Shopify’s 20% rise on better-than-expected Q2 results contributed to these gains. 

Communications ETFs benefited from Lumen Technologies’ 36% surge following strong Q2 revenue. The SPDR S&P Telecom ETF (XTL) increased 3.2%, while the Invesco S&P SmallCap Utilities & Communication Services ETF (PSCU) rose 2.4%.

After rallying Wednesday to continue a comeback, markets were losing steam by the midday session. Tech ETFs turned negative after leading the rally in early trading.

XLK, the Technology Select Sector SPDR Fund which had popped 2%, are now down .40%. Broad markets dipped into the red with SPY, the SPDR S&P 500 ETF Trust dipping just below the flatline. DIA, the SPDR Dow Jones Industrial Average ETF Trust slid just over .10% while QQQ, the Invesco QQQ Trust sank the most, dropping a quarter of a percentage point as tech led the way lower.

XLK was dragged down by chipmaker Nvidia, which dipped nearly 3% by midday.

Energy however continued to rise by midday trading.

XLE, the Energy Select Sector SPDR Fund popped by more than 1% in midday, boosted by Exxon Mobil, which jumped by more than 1.5%. Brent crude prices jumped by roughly 2.5% as investors contended with tightening oil supply amid continued crises in the Middle East. 

Stocks are gaining ground lost in recent market nosedives thanks to Bank of Japan officials calming global jitters by stating they wouldn’t follow last week’s rate hike with a second quick boost.

The SPDR S&P 500 ETF Trust (SPY) added 1.5% and the SPDR Dow Jones Industrial Average ETF Trust (DIA) added 1%. SPY jumped a second-straight day, following three consecutive losses that started last week after the BOJ raised interest rates. It’s still nearly 4% lower from last Thursday’s opening price.

The iShares MSCI Japan ETF (EWJ), which holds that country’s largest companies including Toyota Motor Corp. and Mitsubishi UFJ Financial Group Inc., surged 4.4%, climbing back after dropping 9.3% over the past month.

In another sign of investor optimism, the ProShares VIX Short-Term Futures ETF (VIXY), a barometer of market volatility, slumped 13%. That fund offers exposure to short-term VIX futures.