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After a strong start to the fourth quarter, Wall Street got caught in a vicious circle of trading. Although easing inflation and bets over small rate hikes have provided some relief to the stocks in the first half of the quarter, the risk-on sentiment faded after the Fed revealed hawkish stance for 2023. Additionally, a resurgence of virus cases in China and the resultant strict measures, and recession fears added to the chaos.

Against such a backdrop, a few have performed well. iShares U.S. Oil Equipment & Services ETF (IEZ - Free Report), VanEck Vectors Junior Gold Miners ETF (GDXJ - Free Report), Global X Silver Miners ETF (SIL - Free Report), Global X Copper Miners ETF (COPX - Free Report) and VanEck Vectors Steel ETF (SLX - Free Report) have gained in double-digits so far this year.

These funds have been the quarter’s star performers and could also be winners next quarter if the current trends continue.

The Federal Reserve has raised interest rates by 50 bps this month, marking the seventh rate hike this year in an unprecedented move to rein in inflation. The rate hike takes the benchmark interest rate to 4.25-4.50%, the highest level in 15 years. The central bank now projects at least 75 bps of rate hike, peaking at 5.1% by the end of 2023, 50 bps higher than the previously projected 4.6% back in September. The rate will then be cut to 4.1% in 2024.

The latest bouts of data indicate an improving economy. The economy added 263,000 jobs in November, marking another strong month of job growth. The unemployment rate remained at 3.7%, close to a 50-year low, while average hourly earnings jumped 0.6% from the prior month and 5.1% from the year-ago month.

Further, two surveys point to strong consumer confidence. Consumer sentiment improved in early December, with the University of Michigan's Consumer Confidence Index rising to 59.1 from 56.8 in November. The consumer confidence bounced back in December, reversing consecutive declines in October and November to reach its highest level since April. The Conference Board Consumer Confidence Index climbed to 108.3 from 101.4 in November.

iShares U.S. Oil Equipment & Services ETF (IEZ) - Up 55.6%

The energy sector remained the outperformer, driven by rising oil prices on supply cut fears and China’s demand boost. Investors are betting on a recovery in fuel demand as China continues to ease its COVID-19 restrictions next month after three years. Oil price was also supported by the news that Russia may cut oil output by 5-7% in early 2023 and halt sales to countries supporting a price cap on its crude and oil products.

iShares U.S. Oil Equipment & Services ETF offers exposure to U.S. companies that provide equipment and services for oil exploration and extraction. It follows the Dow Jones U.S. Select Oil Equipment & Services Index, holding 29 stocks in its basket. iShares U.S. Oil Equipment & Services ETF has amassed $342.6 million in its asset base while charging 39 bps in fees per year from investors. It trades in an average daily volume of 743,000 shares and has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

VanEck Vectors Junior Gold Miners ETF (GDXJ) – Up 42.7%

Gold regained sheen in the final quarter of the year on signs of cooling inflation, which could compel Fed to slow down the pace of its interest-rate increases. Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion. Additionally, growing recession fears are driving investors toward gold, as it is considered a safe haven. Acting as a leveraged play on the underlying metal prices, metal miners tend to experience more gains than their bullion cousins in a rising metal market.

VanEck Vectors Junior Gold Miners ETF is a small-cap centric ETF that tracks the MVIS Global Junior Gold Miners Index. Holding 98 stocks in its basket, Canadian firms dominate the fund’s portfolio with half of the portfolio, while Australia (16.6%) and Mexico (6.3%) round out the top three. VanEck Vectors Junior Gold Miners ETF has AUM of $3.8 billion and charges 52 bps in annual fees. It trades in heavy volume of around 7 million shares a day on average.

Global X Silver Miners ETF (SIL) – Up 36.6%

Silver gained on the back of pick-up in industrial and manufacturies activities. Business activity jumped the most since March 2021 in November, suggesting that the largest part of the economy remains resilient. ISM’s gauge of services rose to 56.5 last month from 54.4 in October.

Global X Silver Miners ETF provides investors access to a broad range of silver mining companies by tracking the Solactive Global Silver Miners Total Return Index. It holds 37 stocks in its basket with double-digit concentration on the top firm. Canadian firms take the largest share at 61.3%, while the United States and South Korea round off the next two spots. Global X Silver Miners ETF has managed assets worth $975.6 million and trades in a good volume of about 440,000 shares a day. It charges 65 bps in annual fees.

Global X Copper Miners ETF (COPX) – Up 35.6%

Copper prices rose amid China's supportive measures for its property sector, a weaker U.S. dollar and rising prospects for a reopening in China. Global X Copper Miners ETF offers global access to a broad range of copper mining companies. It tracks the Solactive Global Copper Miners Total Return Index and holds 48 stocks in its basket. Canadian firms take the largest share at 32.7%, while Australia and the United States round off the next two spots.

Global X Copper Miners ETF has managed $1.7 billion in its asset base while charging 65 bps in fees per year. It trades in a good volume of 488,000 shares a day on average.

VanEck Vectors Steel ETF (SLX) – Up 33%

Steel prices are on thr rise driven by easing COVID-19 restrictions in China, which may lead to an increase in demand. VanEck Vectors Steel ETF provides a pure-play exposure to a small basket of 26 stocks in the steel sector. It tracks the NYSE Arca Steel Index. American firms dominate the fund’s returns at 46.5%, followed by Brazil (20.9%) and Australia (11.7%).

VanEck Vectors Steel ETF has amassed $102.3 million in its asset base and charges 55 bps in fees from investors. It trades in a moderate volume of 40,000 shares a day on average.

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