JETS Soars on JetBlue Earnings, LRNZ Dips on CrowdStrike

Airline-focused ETFs took off Tuesday after JetBlue Airways Corp.'s earnings beat pushed the stock 12% higher.

The U.S. Global Jets ETF (JETS) led the pack with a 1.9% gain, while the SPDR S&P Transportation ETF (XTN) added 1.4%. and the iShares U.S. Transportation ETF (IYT) edged up 0.9%. JetBlue's second-quarter earnings beat analysts’ expectations, reporting a profit when analysts had expected a loss. 

Cybersecurity and tech-focused ETFs fell as CrowdStrike shares tumbled 9.7% following news of potential legal action by Delta Air Lines over a recent network outage potentially caused by CrowdStrike that led to cancellations of thousands of flights. The TrueShares Technology, AI & Deep Learning ETF (LRNZ) dropped 3%, and the First Trust NASDAQ Cybersecurity ETF (CIBR) shed 1%. 



Aerospace-related ETFs gained following Howmet Aerospace's 13% jump after the maker of parts for aircraft, jet engines and trucks topped earnings estimates and raised its 2024 profit outlook. The SPDR S&P Aerospace & Defense ETF (XAR) increased 0.4% and the iShares U.S. Aerospace & Defense ETF (ITA) climbed 0.6%. 
 

Semiconductor ETFs were among the biggest losers midday Tuesday, as doubts surrounding Nvidia's market dominance continued to build on last week's pessimism.

The VanEck Semiconductor ETF (SMH), which allocates nearly 20% of its assets to Nvidia stock, was down 4% in afternoon trading while NVDA dropped more than 6%.

A big winner in afternoon trading was volatility as the ProShares VIX Short-Term Futures ETF (VIXY), which tracks short-term VIX futures, rose 6% as market volatility spiked.

Last week was one of the worst for tech ETFs in 2024 and SMH has fallen 18% from its July 10 peak while NVDA is down nearly 30% since that high mark. The broader market has also been dragged down by the recent tech rout as the SPDR S&P 500 ETF Trust (SPY), down 0.7% today, has fallen 3.5% since July 10.

Tech investors appear to doubt Nvidia's short-term potential in maintaining its incredible momentum as it awaits new evidence of AI's strength in Microsoft's Q4 earnings call after today's market close.

SMH vs SPY: 3-Month Performance Chart

Financial ETFs are heading higher in early trading Tuesday as the Federal Reserve kicks off its July policy meeting. 

The largest financial sector fund—the Financial Select Sector SPDR Fund (XLF) rose nearly 1.3%. Other financial ETFs also popped as investors awaited the Fed's decision: VFH, the Vanguard Financials ETF and IYF, the IShares U.S. Financials ETF both added 1.2%. 

While financials perform well during higher rate environments, keeping rates too high for too long often hurts consumer credit and squeezes borrowers, which can lead to losses for banks. So far this year, financials have beaten the broader market, jumping over 16%. 

According to the etf.com Markets Monitor, financials led markets higher Tuesday; the sector was up over 1% in early trading. Broad markets were mixed as investors digested corporate earnings and waited for Wednesday's Fed decision. SPY, the SPDR S&P 500 ETF Trust lost early gains and was negative while DIA, the SPDR Dow Jones Industrial Average ETF Trust jumped 0.4% as the industrials sector popped over 0.5%. QQQ, the Invesco QQQ Trust, which tracks the tech-heavy Nasdaq slipped into the red, dropping 0.4%. 

According to the CME Fed Watch Tool, investors are pricing a roughly 96% chance that the central bank hold rates steady when it announces its decision Wednesday afternoon. The earliest traders believe a rate cut will happen is in September, when markets are forecasting a 87% chance that the Fed will cut rates by 25 basis points.

Investors today will be looking for any clues and a confirmation from the Fed that rate cuts will begin in September, giving markets, the economy, and Americans some relief.