PWER Gains, KBWP Tumbles as Hurricane Milton Intensifies
Higher oil prices and rising bond yields keep equity ETFs under pressure Monday
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Energy transition ETFs rise on generator demand; insurance ETFs fall on storm risk.
ETFs showed mixed performance Monday afternoon as investors digested the potential implications of Hurricane Milton’s intensification.
The Macquarie Energy Transition ETF (PWER) rose 1.5% as Hurricane Milton strengthened to a Category 5 storm. Generac Holdings, a marker of power generators saw its shares surge 9% in anticipation of increased demand.

The Invesco KBW Property & Casualty Insurance ETF (KBWP) fell 4.8% as insurers braced for potential losses from Hurricane Milton. Allstate, Travelers, Progressive and Chubb all saw shares drop more than 4%. Florida-based Universal Insurance plummeted 19% as the state prepared for evacuations.
The Vanguard Consumer Discretionary ETF (VCR) declined 1.8% after Amazon shares fell 3.2%. Wells Fargo downgraded Amazon to equal weight from overweight, lowering its price target due to concerns about slowing growth and competition. The Direxion Daily AMZN Bull 1.5X Shares ETF (AMZU) experienced a steeper 6.3% drop.
The iShares U.S. Digital Infrastructure and Real Estate ETF (IDGT) gained. 0.1%, boosted by Super Micro Computer’s 15.7% surge. The server company announced it’s now shipping over 100,000 AI-focused graphics processing units per quarter.
Stocks take a breather while surging yields hold bond ETFs down
Stock and bond ETFs are slipping early this afternoon, a day after a stronger-than-expected jobs report diminished hopes for a sizeable interest rate cut and boosted yields on Treasuries.
Benchmark Treasuries rose past 4% for the first time in two months, according to a Barchart tweet, and bond exchange-traded funds largely dropped. The Vanguard Total Bond Market ETF (BND) dropped 0.3% while the iShares 20+ Year Treasury Bond ETF (TLT) declined 0.7%.
Short-term treasury ETFs rose, with the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), adding about 0.2%.
Volatility is returning to markets, as measured by the 2.8% jump in the ProShares VIX Short-Term Futures ETF (VIXY). That fund, which tracks an index with exposure to futures contracts on the CBOE Volatility Index, is at its highest price in a month.
VIXY 1-month price chart

Meanwhile, stock funds were slipping after last week's gain of less than 1% as measured by the S&P 500 ETF Trust (SPY). That fund, the world's largest, dropped 0.4% this afternoon. It's gained 21% so far this year.
After last week's jobs report, which showed 100,000 more jobs being created than economists had expected and the jobless rate ticking down to 4.1%, investors are betting primarily that the Federal Reserve next month will cut interest rates a modest 0.25%, according to the CME Fedwatch Tool.
Third-quarter earnings season begins cranking up this week as Pepsico Inc., Delta Air Lines Inc. and Domino's Pizza Inc. report.
Stock ETFs Sink as Bond Yields, Oil Rise
Higher oil prices and rising bond yields are keeping equity ETFs under pressure in late morning trading Monday.
XLE, the Energy Select Sector SPDR Fund jumped more than half a percentage point as SPY, the SPDR S&P 500 ETF Trust sank a quarter of a percentage point.
Oil ETFs rose even higher, boosted by Hurricane Milton strengthening in the Gulf of Mexico and ongoing conflict in the Middle East, both of which worried investors about oil production. Higher oil prices can boost inflation, which spooks investors who fear the negative impact on the U.S. economy.
USO, the United States Oil Fund LP jumped more than 3%; other oil ETFs also edged upwards. BNO, the United States Brent Oil Fund LP popped 3.2%.
UCO, the ProShares Ultra Bloomberg Crude Oil rose the most among the largest oil ETFS; the fund was up 6%.

Other broad market ETFs were in the red Monday; QQQ, the tech-heavy Invesco QQQ Trust and DIA, the SPDR Dow Jones Industrial Average ETF Trust both fell more than 0.3%.
Bond yields also rose, putting further pressure on equity markets as investors looked elsewhere for gains. Because yields and prices have an inverse relationship, rising yields caused bond ETF prices to fall. TLT, the iShares 20+ Year Treasury Bond ETF dropped nearly three quarters of a percentage point. AGG, the iShares Core U.S. Aggregate Bond ETF also fell, sinking .25%.
Inflation Data in Focus This Week
Investors will be watching the consumer price index (CPI) for the latest read on inflation for further clues on future rate cuts. After a strong September jobs report, declining inflation would boost chances that the Federal Reserve might be more willing to cut rates again before the end of the year.
Currently, markets are anticipating a 25-basis point rate cut at the Fed's next policy meeting at the beginning of November, according to the CME Fed Watch Tool.
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