TLT, Semiconductor ETFs Jump As Powell Speaks

Federal Reserve Chair Jerome Powell laid the groundwork Friday for future interest rate cuts, boosting market sentiment. The Fed’s next meeting is set for Sept. 17.

Major ETFs closed higher, with the SPDR S&P 500 ETF Trust (SPY), the Invesco QQQ Trust (QQQ) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) all up about 1.1%. This puts the three major averages on track for a winning week after some earlier turbulence.

Tech-focused ETFs saw significant gains. Strive U.S. Semiconductor ETF (SHOC) rose 2.2% and VanEck Semiconductor ETF (SMH) gained 2.5%, while AXS Esoterica NextG Economy ETF (WUGI) advanced 1.1%. These funds were boosted by Nvidia’s 4.5% increase.

Tesla’s stock jumped 4.6% following Powell’s optimistic commentary, lifting related ETFs.

The T-Rex 2X Long Tesla Daily Target ETF (TSLT) rose 9%, Direxion Daily TSLA Bull 2X Shares (TSLL) was up, 8.9%. The Nightview Fund (NITE) and ARK Innovation ETF (ARKK) also benefited, rising 1.7% and 4.5% respectively. 

Markets are rising in eager anticipation of Fed Chair Jay Powell's comments from Jackson Hole. With broad markets going higher, semiconductor ETFs were one of Friday's leaders to start the trading day. The high-growth industry is not only supported by rate cuts, but was boosted Friday by rises in chip stock Nvidia which is set to report earnings next week. 

SOXL, the Direxion Daily Semiconductor Bull 3X Shares jumped over 8% Friday morning while SOXX, the Direxion Daily Semiconductor Bull 3X Shares rose nearly 3%. USD, the ProShares Ultra Semiconductors jumped nearly 7%, due to a nearly 30% allocation of the fund in Nvidia. 

XLK, the Technology Select Sector SPDR Fund jumped over 1.5%, the biggest gain of all the sectors, according to the etf.com Markets Monitor.

Other rate sensitive ETFs also received support Friday. With interest rate cuts, fixed income prices would rise; prices move in the opposite direction to yields. TLT, the iShares 20+ Year Treasury Bond ETF notched a 0.7% gain. 

The largest fixed income ETF, the iShares Core U.S. Aggregate Bond ETF (AGG) edged more than 0.4% higher. 

As investors awaited comments from Chair Powell, broad markets continued to march higher. SPY, the SPDR S&P 500 ETF Trust rose 1% while DIA, the SPDR Dow Jones Industrial Average ETF Trust jumped 0.7% Friday.

Tech-heavy QQQ, the Invesco QQQ Trust logged the biggest gain in early trading, popping more than 1.3%.

Markets will be listening for clues about the future path of rate cuts when Powell starts speaking at 10 AM Eastern. While markets are anticipating a rate cut in September, it's unclear how many more rate cuts markets can expect; or how big. According to the CME Fed Watch Tool, investors are forecasting a nearly 74% chance that September's rate decision will be a small 25 basis point cut.