Investors in ETFs benefited last week as Vanguard joined its peers on the zero trade commissions train. Vanguard's commission-free platform includes nearly every ETF, as well as other stocks and bonds. Charles Schwab (SCHW ) was the first major broker to give investors commission-free online trading back in October, prompting TD Ameritrade (AMTD ) and E-Trade (ETFC ) to offer free trades a week later, and Fidelity joined not long after.
SPDR S&P 500 ETF Trust (SPY ) traded very well last week as the S&P crushed fresh new records in the beginning. The market average took a hard hit at the week's close due to the recent conflict between the U.S. and Iran adding uncertainty to the 2020 outlook. That market fear boiled into the Invesco QQQ Trust (QQQ ) who also had record growth during the 'Santa Claus' rally, only to cool off steam as the fund crashed into Friday.
ETFs on the move due to the U.S.-Iran Conflict:
Financial Select Sector SPDR ETF (XLF ) took a big hit as financial stocks have slumped after U.S. airstrikes targeting Iran fueled investment fears. SPDR S&P Regional Banking ETF (KRE ) and Invesco S&P Financials Revenue ETF (RWW ) also fell as major U.S. bank stocks tumbled.
United States Oil Fund (USO ) has shown growth recently following better trade outlook from the U.S- China conflict. With geopolitical turmoil igniting in the region that contains much of the world's production of oil, crude prices have skyrocketed. Analysts from the Eurasia Group have predicted that barrel prices will likely maintain around $70, "but could make a run at $80 if the conflict spreads to the oil fields of southern Iraq or if Iranian harassment of commercial shipping intensifies."
Energy Select Sector SPDR Fund (XLE ) fell last week despite major increases in oil and gas stocks. This was mainly due to shares of Exxon Mobil (XOM ) and Chevron (CVX ) bringing the fund down with their declining shares. However, Invesco Dynamic Energy Exploration & Production ETF (PXE ) and iShares Global Energy ETF (IXC ) have both increased due to the skyrocketing of oil prices.
Defense stocks are set to have a greater performance as the U.S. enters more conflict. Relevant ETFs include: S&P Aerospace & Defense Select ETF (XAR ), Invesco Aerospace & Defense ETF (PPA ) and SPDR S&P Kensho Final Frontiers ETF (ROKT ).
