SPY, QQQ Extend Winning Streaks as Fed Meeting Nears

Stocks continued their upward trend Monday, with major ETFs advancing as investors anticipate the Federal Reserve’s annual symposium in Jackson Hole later this week. 

The SPDR S&P 500 ETF Trust (SPY) closed up 0.9%, while the Invesco QQQ Trust (QQQ) gained 1.3%, as both the S&P 500 and the Nasdaq marked their eighth consecutive day of gains, a first for 2024. Sector-specific ETFs also saw positive movement. The First Trust Nasdaq Transportation ETF (FTXR) 1.2%, lifted by General Motors’ 1% increase. The gains come after news that GM is laying off over 1,000 salaried employees globally in its software and services division following an operational review. 

The Proshares Metaverse ETF (VERS) climbed 1.1%, boosted by FuboTV’s 19% surge. The sports-focused streaming stock benefited from a U.S. judge temporarily blocking the launch of Venu, a rival sports streaming service. FuboTV had alleged in a lawsuit that the joint venture between Disney, Warner Bros. Discovery and Fox was anticompetitive.

The iShares 20+ Year Treasury Bond ETF (TLT) rose 0.5% and the United States Oil Fund, LP ETF (USO) fell 2.5% in afternoon trading as investors weighed a range of global economic data.

The U.S. Leading Economic Indicator Index dropped -0.6% month-over-month in July to 100.4, more than the -0.3% expected and -0.2% decline in June, according to The Conference Board report on Monday.

While the index no longer indicates a recession, it does forecast a slowing economy, which further supports a rate cut coming from the Federal Reserve in September. For more clues about rate policy, investors will be listening to Fed Chair Jerome Powell speak at this week's Jackson Hole Economic Symposium.

Meanwhile, oil prices have been declining in recent days due to a combination of factors:

• Concerns over China's economy: As the world's largest oil importer, China's economic performance significantly impacts oil demand. Recent economic indicators from China have raised concerns about its growth trajectory.
• Global economic slowdown fears: There are growing worries about a potential global economic slowdown, which could dampen oil consumption.
• Increased oil supply: Rising oil production from some countries has contributed to a surplus in the market, putting downward pressure on prices.   
• Geopolitical tensions easing: While Middle East tensions remain a concern, the situation has stabilized somewhat, reducing the oil price premium associated with geopolitical risks.

Energy ETFs were boosting markets on Monday as the comeback from the early August sell-off stalled. XLE, the Energy Select Sector SPDR Fund jumped more than 1% in early trading. While crude oil prices have slid, natural gas prices have risen as temperatures have hit record highs. 

BOIL, the ProShares Ultra Bloomberg Natural Gas soared over 7%. The fund is one of the top gainers Monday, according to etf.com data. 

But broader markets still continued to struggle Monday. According to the etf.com Markets Monitor, only energy, technology, and utilities were in the green. 

SPY, the SPDR S&P 500 ETF Trust notched just a .4% gain, while DIA, the SPDR Dow Jones Industrial Average ETF Trust rose a half a percentage point. 

QQQ, the Invesco QQQ Trust rose the least, edging just a quarter of a percentage point higher.

Investors Await Comments from the Fed

The Fed's Jackson Hole conference kicks off this week and markets will wait to hear from Fed Chair Jay Powell when he delivers his remarks on Friday.

While it seems a foregone conclusion that the Fed will be doling out a rate cut at its policy meeting next month, one question remains: "How large will the rate cut be?"

Markets right now have priced in a nearly 80% chance of a 25 basis point cut. As the rate cuts loom, fixed income ETFs have piqued investor interest again. 

Fund flows for the the largest Treasury bond fund, the IShares 20+ Year Treasury Bond ETF (TLT), has topped $1.5 billion over the past 5 days. 

AGG, the IShares Core U.S. Aggregate Bond ETF has seen flows exceeding $2 billion over the past month.