The biggest news surrounding the U.S. stock market early this week is the historic record high the S&P 500 (SPY) reached during this corporate earnings season. The NASDAQ (QQQ) has been more fickle as of late, with the index declining in the mid-week. This is the second week of the large third quarter earnings season, and markets have been reflecting a mixed bag of corporate profits. Many who have resulted in less-than-expected earnings have begun to cite the trade tensions throughout the summer and making a peak in September as to why they had a lackluster quarter.
Keeping a watch on market sectors, some have been growing well into the mid-week for the earnings season. Sectors that are on the upswing include Consumer Staples, Health Care, and Real Estate. Analysts this week have voiced concerns over the signs of weakness that are showings in sectors like Technology, Communication Services, and Consumer Discretionary, for the recent outperformance in some sectors does not mean that the economic and earnings slowdown that the market is currently experiencing is coming to an end. Despite the mixed reviews over the current market movement, the advances of certain sectors have boosted their respective ETFs.
Sector ETFs that have been increasing well during this earnings season have included Health Care (XLV), which has seen a current 5-Day return of +2.13%. Recent news surrounding this sector though show the underpinnings of a more fragile market, with drug shortages demonstrating a trend in manufacturers only producing medical products that will create the most profit and not supplying enough less profitable medicines. Consumer Staples (XLP) has also been trading higher during this earnings season, but analysts are beginning to conclude that stock valuations may be stretched.
Financials (XLF) has also had one of the better portfolios for the start of the week. Chief equity and derivatives strategist for BTIG Julian Emanuel stated the being bullish ahead of the Federal Reserve's decision on interest rate cuts and rotating into the financial sectors will really benefit investors due to the "steepening yield curve" resulting in a great time to buy. Utilities (XLU) is on the increase in the mid-week, despite showing diminished early returns for the ETF. Technology (XLK) has also demonstrated better returns this earnings season, being carried by the mixed bag of corporate earnings earlier in the week.
The sectors that are showing more weakness include Energy (XLE), with the ETF currently resting with negative returns. Industrials (XLI) has also been categorized as a weakness, but the ETF is displaying great returns in the mid-week and is showing the stabilization of the U.S. manufacturing slowdown as the month reaches its end. Consumer Discretionary (XLY) has also shown signs of weakness in the current market due to a reduction in consumer confidence.
In commodity ETFs, the SPDR Gold Shares (GLD) has been returning well this week, despite the slight decrease in gold prices earlier in the week. United States Natural Gas Fund (UNG) has been showing great early returns, but its yearly returns keep dropping lower. United States Oil Fund has been declining throughout the week due to oil prices easing after increasing for four straight days last week.
Finally in currency ETFs, the dollar (UUP) has been increasing throughout the mid-week due to more easing of U.S. and China trade tensions. The British pound (FXB) has also been showing positive returns due to the extension of Brexit to a 2020 deadline. Lastly, the Euro (FXE) has been on a steady decline due to a global slowdown of growth. The ETF has had some recent recovers but is still demonstrating negative early returns.