Image Source: Pixabay

Wall Street was downbeat last week as evident from a 0.4% fall in the S&P 500. The down Jones was off 0.1% and the Nasdaq Composite was down 1.3% due to rising rates. The benchmark U.S. treasury yield started the week at 4.17% and closed out the week at 4.30%. The inflation prints (which means the Fed is likely to cut rates in the near term) led to rise in bond yields.

Meanwhile, January retail sales data came in at soft. In January, U.S. retail sales experienced a setback, slipping more than anticipated. The Commerce Department's Census Bureau reported a 0.8% drop in retail sales for the month, down from a 0.4% gain in December and worse than the estimate for a 0.3% drop (per a CNBC article). The drop in sales was caused declines in both auto dealership and gasoline service station receipts.

On a positive note, although the S&P 500 was down for the week, the index hit an all-time high last week. Bitcoin, the world's largest cryptocurrency, surged past the $52,000 mark for the first time since December 2021. The surge primarily came on the back of the increasing movement of institutional money into the asset class.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) experienced a notable increase, climbing 4 points to reach 48 in February. This improvement marks the third successive month of positive sentiment in the housing market and represents the highest level of confidence since August 2023.

Against this backdrop, below we highlight a few ETF areas that should be under close watch to start this week.

Nvidia to Beat on Earnings?

Zacks Rank #2 (Buy) NVIDIA (NVDA - Free Report) is set to report its earnings on Feb 21, 2024, after the market closed. NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Nvidia currently has a Zacks Rank #2 (Buy) and an Earnings ESP of +3.67%.

According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. The Zacks Consensus Earnings and Sales estimates for the to-be-reported quarter for Nvidia are $4.45 and $20.21 billion, respectively.

Nvidia-heavy ETFs like VanEck Semiconductor ETF (SMH - Free Report), AXS Esoterica NextG Economy ETF (WUGI - Free Report), and Global X Robotics & Artificial Intelligence ETF (BOTZ - Free Report) should be under watch for likely gains.

Rates to Rise Again?

Simplify Interest Rate Hedge ETF (PFIX - Free Report) has jumped 5.9% last week as rates rose driven by a spike in inflation. In January, U.S. inflation topped expectations as persistently high shelter prices weighed heavily on consumers. The consumer price index rose by 0.3% for the month.

On a year-over-year basis, the increase stood at 3.1%, a slight decrease from December's 3.4%. Economists surveyed by Dow Jones had anticipated a monthly increase of 0.2% and an annual gain of 2.9%. However, the actual figures surpassed these expectations, as quoted on CNBC.

Headline month-over-month producer price index (PPI) reached +0.3%, 20 bps higher than the +0.1% expected — in fact, the highest we’ve seen since +0.4% reported in September of last year. Excluding volatile food and energy prices, the core print comes in much hotter, i.e., +0.5% from an anticipated gain of 0.1%, which is the highest print since the early part of 2022, back when the Fed first started raising interest rates to cool inflation.

This means rates are likely to remain high in the near term and ETFs that give investors protection against high rates should continue to excel.

Bitcoin Miners to Fall On Profit Booking?

Bitcoin prices gained about a modest 4% last week but bitcoin miners skyrocketed on blockbuster Coinbase earnings. GraniteShares 2x Long COIN Daily ETF (CONL - Free Report) surged 55% last week while Global X Blockchain ETF (BKCH - Free Report) advanced 17.6%.

Coinbase Global (COIN) cheered investors after reporting solid fourth-quarter 2023 earnings results on Feb 15, after the closing bell. It posted its first quarterly profit in two years, beating on earnings and revenues. Trading volume also surged on a new wave of optimism about digital assets, marking a turning point for the largest U.S. cryptocurrency exchange.

Investors may intend book profits on ETFs like Fidelity Crypto Industry and Digital Payments ETF (FDIG - Free Report) (up 13.8% last week, up 29.2% past month) and First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT - Free Report) (up 13.7% last week, up 39.6% past month). So, one should tread cautiously on bitcoin miners and blockchain ETFs.

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