COMMENTARY:
- The relatively calm week of late offered a respite after stocks came back from weeks on fears about President Donald Trump’s trade war and then on hopes that he’ll relent on some of his tariffs. Most other asset classes also held relatively steady ahead of a highly anticipated meeting between China and the United States on trade. The S&P500 fell about 50 basis points for the week.
- Industrials gained the most again this week up 1.1%. GE Aerospace, the largest constituent was up 3.5%. Rockwell Automation rallied 16.2%. A robust jobs report at the start of May boosted investor confidence in the economic outlook, suggesting continued demand for industrial goods and services.
- Utilities were up 0.6% for the period. Constellation Energy and AES Corp gained the most up 9.8% and 9.2% respectively.
- The sector that took the largest hit this week was Health Care down 4.2%. Several major health care companies reported weaker-than-expected quarterly results, with some missing revenue or earnings forecasts. This led to sharp sell-offs in key industry names, dragging down the entire sector. Vertex Pharmaceuticals (-15.2%), Regeneron Pharmaceuticals (-12.9%), and Moderna (-12.2%) were the three biggest laggards for the week.
- Overall, five sector were down for the week and the remaining six were gainers. Year to date, Utilities holds on the lead up 6.0%, on the flip side Consumer Discretionary is off 9.8% since the end of 2024.
ETF Tidbits:
Here are the key ETF news highlights from the week:
- Technology Sector ETFs Lead the Market
- Technology ETFs outperformed, buoyed by strong earnings from major tech companies and continued enthusiasm for artificial intelligence, cloud computing, and semiconductor growth.
- Heavy inflows were reported into tech-focused funds, with investors seeking exposure to sector leaders and innovation themes.
- Rotation Out of Defensive ETFs
- Investors rotated out of defensive sectors such as health care and utilities ETFs, as risk appetite increased and economic data pointed to ongoing growth.
- Cyclical and growth-oriented ETF categories saw increased inflows as a result.
- Industrial and Infrastructure ETFs See Gains
- Industrial sector ETFs benefited from positive jobs data and renewed optimism about infrastructure spending, supporting a broad rally in cyclical sectors.
- Energy ETFs Lag as Oil Prices Fall
- Energy ETFs underperformed due to a decline in oil prices, as easing geopolitical tensions and steady supply weighed on the sector.
- Record Inflows into Thematic and AI ETFs
- Thematic ETFs, especially those focused on artificial intelligence, robotics, and next-generation technology, continued to attract record inflows as investors positioned for long-term growth trends.
