Defensive Sectors Surge as Weak Jobs Data Sparks Tech Sell-Off

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Macro Overview

U.S. equity markets ended a volatile session with a stark divergence, driven by a much weaker-than-expected June employment report. The S&P 500 (IVV) finished nearly flat with a 0.09% decline, as a sharp rotation out of technology offset gains elsewhere. In contrast, developed international markets (EFA) rallied 1.31%, while Emerging Markets (EEM) fell 1.17%. Fixed income markets posted modest gains, with the U.S. Aggregate Bond index (AGG) rising 0.11% as the soft labor data tempered expectations for a near-term Federal Reserve rate hike.

U.S. Size & Style

A significant rotation from growth to value defined the day’s trading across U.S. style factors. Large Cap Value (IVE) posted a strong 1.06% gain, while its growth counterpart (IVW) tumbled 1.07%, creating a performance gap of over two percentage points. This trend was consistent across the capitalization spectrum, though mid and small-cap indexes ultimately closed lower. Small Cap Growth (IJT) still boasts the strongest one-month return at 7.71%, despite its 0.76% drop on the day.

Name (Ticker) 1-Day 1 Month 3 Month YTD 1 Year
Large Value (IVE) 1.06% 1.42% 9.08% 9.38% 18.48%
Large Cap (IVV) -0.09% -1.66% 13.88% 9.85% 21.48%
Large Growth (IVW) -1.07% -4.14% 18.20% 10.05% 23.86%
Mid Value (IJJ) -0.01% 2.70% 10.49% 12.29% 17.17%
Mid Cap (IJH) -0.46% 1.41% 11.88% 15.84% 21.55%
Mid Growth (IJK) -0.81% 0.22% 13.15% 19.09% 25.45%
Small Value (IJS) -0.77% 2.79% 14.35% 19.80% 33.02%
Small Cap (IJR) -0.72% 5.18% 17.14% 22.44% 31.94%
Small Growth (IJT) -0.76% 7.71% 19.95% 24.98% 30.99%

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U.S. Sectors & Industries

Sector performance illustrated a classic flight to safety, accompanied by a sharp rebuke of high-growth areas. The Technology sector (XLK) was the clear laggard, plummeting 2.71% and pushing its one-month loss to 8.78%. In stark contrast, defensive sectors led the market, with Health Care (XLV) surging 2.63%, followed by Utilities (XLU) and Consumer Staples (XLP), which gained 2.21% and 2.03% respectively. Financials (XLF) also showed strength, rising 1.53% and entering overbought territory with an RSI of 74.

Name (Ticker) 1-Day 1 Month 3 Month YTD 1 Year
S&P 500 (SPY) -0.13% -1.70% 13.85% 9.80% 21.37%
Health Care (XLV) 2.63% 12.33% 12.02% 6.67% 23.07%
Utilities (XLU) 2.21% 4.90% -0.62% 8.62% 15.79%
Consumer Staples (XLP) 2.03% 4.59% 4.51% 10.79% 6.25%
Materials (XLB) 1.94% 1.33% 3.56% 15.62% 15.83%
Financials (XLF) 1.53% 8.46% 12.69% 2.43% 7.33%
Real Estate (XLRE) 1.13% 3.63% 8.31% 12.44% 10.60%
Energy (XLE) 0.78% -7.52% -9.54% 20.66% 26.23%
Industrials (XLI) 0.30% 5.84% 12.57% 19.18% 25.72%
Communication Services (XLC) -0.13% -3.24% -1.62% -6.35% 3.29%
Consumer Discretionary (XLY) -0.82% -0.20% 8.51% -1.53% 7.29%
Technology (XLK) -2.71% -8.78% 32.95% 25.74% 43.15%

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Global Thematic

Thematic ETFs reflected the day’s dominant trends of risk-off sentiment in technology and a bid for precious metals. Gold and silver miners were the top performers, with the Sprott Junior Gold Miners ETF (SGDJ) and the VanEck Junior Gold Miners ETF (GDXJ) climbing 5.36% and 4.96%, respectively. Conversely, the sell-off was concentrated in semiconductor and photonics-focused funds. The Corgi Lithography & Semiconductor Photonics ETF (EUV) led the laggards with a steep 10.90% decline.

Name (Ticker) 1-Day
Leaders
Sprott Junior Gold Miners ETF (SGDJ) 5.36%
VanEck Junior Gold Miners ETF (GDXJ) 4.96%
Global X Defense Tech ETF (SHLD) 4.51%
VanEck Gold Miners ETF (GDX) 4.48%
Sprott Active Gold & Silver Miners ETF (GBUG) 4.26%
Laggards
Corgi Lithography & Semiconductor Photonics ETF (EUV) -10.90%
CoinShares Bitcoin Mining ETF (WGMI) -9.49%
Tuttle Capital Pure Play Photonics ETF (FOTO) -8.36%
Roundhill Memory ETF (DRAM) -7.94%
Spear Alpha ETF (SPRX) -6.98%

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Developed ex-U.S. & Emerging Markets

Developed international markets broadly outperformed the U.S., while emerging markets faced headwinds. European equities were particularly strong, as Germany (EWG) and the U.K. (EWU) both advanced 2.67% and 2.66%. In Asia, the tech-heavy South Korean market (EWY) sold off sharply, dropping 2.89% and extending its one-month loss to over 16%. Chinese equities (MCHI) also continued their slide, falling another 1.19% on the day.

Name (Ticker) 1-Day 1 Month 3 Month YTD 1 Year
Developed Markets ex-U.S.
Developed ex-U.S. (EFA) 1.31% 0.94% 8.17% 10.39% 20.60%
Australia (EWA) 1.41% -3.33% 1.38% 8.77% 9.18%
Canada (EWC) 0.17% -2.39% 4.92% 7.62% 26.40%
France (EWQ) 2.14% 2.02% 7.45% 4.49% 9.20%
Germany (EWG) 2.67% -0.96% 8.15% 1.53% 2.33%
Hong Kong (EWH) -0.62% -8.22% -8.18% 0.07% 9.17%
Japan (EWJ) 0.10% 0.06% 9.79% 15.97% 30.52%
Netherlands (EWN) -1.08% -0.03% 17.38% 19.61% 30.43%
South Korea (EWY) -2.89% -16.03% 46.61% 85.29% 156.07%
Switzerland (EWL) 2.37% 5.43% 10.45% 8.59% 17.81%
U.K. (EWU) 2.66% 1.94% 3.48% 8.78% 23.12%
Emerging Markets
Emerging Markets (EEM) -1.17% -6.74% 16.68% 20.69% 37.99%
Brazil (EWZ) 0.73% -2.85% -9.36% 9.41% 24.55%
China (MCHI) -1.19% -10.40% -8.23% -14.69% -5.68%
India (INDA) 0.71% 3.19% 6.24% -8.31% -10.86%
Indonesia (EIDO) 1.51% -9.09% -25.00% -37.67% -32.68%
Malaysia (EWM) 1.16% -4.13% -2.87% 0.61% 14.55%
Mexico (EWW) 0.31% -3.13% 0.65% 10.49% 26.80%
South Africa (EZA) 2.02% -4.66% -3.90% -5.01% 26.95%
Taiwan (EWT) -0.79% -2.10% 48.17% 65.06% 86.71%
Thailand (THD) 0.60% -1.81% 7.08% 22.84% 43.56%

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Fixed Income

Fixed income assets saw modest but widespread gains as the weak U.S. jobs report pushed bond yields lower. The core U.S. Aggregate Bond ETF (AGG) rose 0.11%, with similar positive moves across both government and corporate debt. High Yield (HYG) also ticked up 0.15%, indicating contained credit concerns. A notable outlier was the Convertible bond ETF (CWB), which fell 1.39% due to its high correlation with the underlying growth equities that were under pressure.

Name (Ticker) 1-Day 1 Month 3 Month YTD 1 Year
Multisector
Short-Term (BSV) 0.17% 0.27% 0.41% 0.64% 3.26%
Core (AGG) 0.11% 0.23% 0.38% 0.70% 3.97%
Long-Term (BLV) 0.10% 0.19% 0.54% 0.78% 3.75%
Core Enhanced (IUSB) 0.09% 0.23% 0.56% 0.83% 4.19%
Government
Short-Term (SPTS) 0.17% 0.24% 0.43% 0.75% 3.17%
Inflation Protected (TIP) 0.15% -0.53% 0.37% 1.19% 3.28%
Intermediate (SPTI) 0.11% 0.21% -0.05% -0.02% 2.79%
Ultrashort (BIL) 0.04% 0.35% 0.91% 1.82% 3.87%
Long-Term (SPTL) 0.00% 0.23% -0.10% 0.24% 2.79%
Specialty
Corporate (SPIB) 0.15% 0.32% 0.71% 0.87% 4.20%
High Yield (HYG) 0.15% 0.22% 1.70% 1.83% 5.23%
Mortgage Backed (MBB) 0.12% 0.15% 0.29% 0.96% 5.13%
Preferred Stock (PFF) 0.03% -2.60% 1.53% 0.92% 4.09%
Bank Loans (BKLN) -0.05% -0.29% 0.86% -0.08% 3.62%
Convertible (CWB) -1.39% -5.66% 12.27% 17.85% 28.18%
International & EM
Emerging Local (EMLC) 0.43% 0.25% 3.16% 1.74% 7.06%
International Local (IGOV) 0.34% -1.82% 0.11% -1.49% -3.36%
Emerging USD (EMB) 0.19% 0.35% 3.68% 2.54% 9.64%
International USD (BNDX) -0.06% 0.31% 1.29% 1.21% 2.31%
Municipals
Long-Term (MLN) 0.28% 1.07% 2.53% 3.27% 9.51%
High Yield (HYD) 0.19% 0.96% 3.10% 3.14% 7.49%
Intermediate (MUB) 0.15% 0.64% 1.76% 1.98% 6.35%
Short-Term (SUB) 0.06% 0.13% 0.53% 0.91% 2.64%

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Commodities

Precious metals were the bright spot in the commodity complex, staging a significant rally. Gold (GLD) rose 2.03%, while Silver (SLV) gained 2.69% and Palladium (PALL) jumped 3.99%. Energy markets were more subdued, with WTI Crude (USO) posting a 0.69% gain despite geopolitical headlines suggesting potential for increased supply. Agricultural commodities were mixed to lower on the day.

Name (Ticker) 1-Day 1 Month 3 Month YTD 1 Year
Broad Commodities (DJP) 0.16% -11.26% -10.86% 15.90% 25.95%
Agriculture
Wheat (WEAT) 0.04% -3.20% -2.01% 12.22% -3.41%
Soybeans (SOYB) -0.33% -1.97% 0.37% 11.80% 10.54%
Broad (DBA) -0.45% -1.40% -1.55% 4.78% 7.07%
Corn (CORN) -0.53% -4.80% -7.31% -4.91% -6.39%
Sugar (CANE) -0.81% -0.10% -3.65% 0.15% -7.82%
Energy
WTI Crude (USO) 0.69% -24.25% -24.61% 50.35% 37.56%
Brent Crude (BNO) 0.66% -25.00% -26.70% 40.08% 31.36%
Natural Gas (UNG) 0.52% 0.96% 2.03% -5.55% -24.90%
Broad (DBE) 0.30% -17.74% -15.11% 47.67% 39.27%
Industrial Metals
Copper (CPER) 0.22% -8.15% 8.50% 6.66% 15.66%
Broad (DBB) 0.08% -10.03% 1.74% 4.45% 26.40%
Precious Metals
Palladium (PALL) 3.99% -8.18% -16.58% -21.21% 8.02%
Platinum (PPLT) 3.01% -16.03% -18.58% -21.04% 13.09%
Silver (SLV) 2.69% -19.08% -16.37% -14.59% 65.52%
Broad (DBP) 2.22% -10.76% -13.10% -7.55% 27.89%
Gold (GLD) 2.03% -8.21% -11.94% -4.59% 22.27%

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Cryptocurrency

Major cryptocurrencies advanced, moving inversely to the technology and semiconductor stocks that sold off during the session. Ethereum (ETHA) was a standout performer, climbing 5.50%. Bitcoin (IBIT) also posted a solid gain of 2.56%. This positive performance in the digital assets themselves contrasted sharply with the performance of related equities, as seen in the 9.49% decline of the CoinShares Bitcoin Mining ETF (WGMI).

Name (Ticker) 1-Day 1 Month 3 Month YTD 1 Year
XRP (XRP) 2.36% -11.21% -17.16% -40.94%
Multi-Coin (NCIQ) 2.48% -8.87% -9.94% -32.65% -45.32%
Bitcoin (IBIT) 2.56% -8.36% -8.16% -29.77% -44.14%
Solana (SOLZ) 4.92% 7.34% 2.32% -35.69% -51.42%
Ethereum (ETHA) 5.50% -10.57% -17.72% -42.67% -34.89%

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What to Watch Today

Looking ahead to the shortened post-holiday week, market participants will be closely monitoring a packed economic calendar and key Federal Reserve communications. The focus kicks off on Monday with the final PMI Composite and the ISM Services Index, providing a crucial pulse check on the services sector. Mid-week attention shifts to the release of the FOMC Minutes on Wednesday afternoon, which will be heavily scrutinized for clues on the trajectory of interest rates. Thursday brings the weekly Initial Jobless Claims and Existing Home Sales data, alongside scheduled remarks from Fed officials John Williams and Lorie Logan. Additionally, markets will continue to digest recent policy signals from Fed Chairman Kevin Warsh.

This material is for informational purposes only and should not be considered investment advice. All investments, including ETFs, involve risk, including the possible loss of principal. Investors should consider their investment objectives, risks, charges, and expenses carefully before investing.

This analysis was developed by the team at ETF Action. We leverage advanced AI tools to assist in the drafting and refinement of our content, based on our expert prompts, direction, and final review.