Note: Based on multiple requests, we’ve linked all paragraph headers to their corresponding FREE performance & flows dashboard on the gated platform. Must have an account and be logged in to access.
Macro Overview
U.S. equities finished a mixed session on Tuesday as investors displayed caution ahead of key inflation data due this morning. While the broad market S&P 500 (IVV) managed to close higher by 0.23%, underlying performance revealed significant divergence and a risk-off sentiment in several areas. Mid-cap stocks (IJH) notably lagged, falling 0.91% on the day. In contrast, the speculative fervor for digital assets continued, with crypto mining ETFs (WGMI) surging 11.59%, showcasing a pocket of high-risk appetite amidst the broader market’s apprehension.
U.S. Size & Style
The divide between large and small-cap stocks was a prominent theme in the previous session. Large-cap growth (IVW) led the way with a 0.46% gain, continuing its year-to-date outperformance, which now stands at 15.65%. Conversely, smaller stocks saw broad-based weakness, with both small-cap value (IJS) and blend (IJR) declining by 0.93% and 0.87%, respectively. This retreat from smaller, more economically sensitive companies is further evidenced by fund flows, where the iShares Russell 2000 ETF (IWM) has seen outflows of $9.52 billion year-to-date.
U.S. Sectors & Industries
Sector performance was bifurcated, with defensive Utilities (XLU) leading all sectors with a 0.69% gain. Communication Services (XLC) also performed well, rising 0.57%. On the other end of the spectrum, economically sensitive sectors faced significant selling pressure. The Materials sector (XLB) was the worst performer, dropping 1.63%, and has shown relative weakness over the last three months with a gain of only 2.97% compared to the S&P 500’s 8.77% gain over the same period. The software industry also showed signs of investor skepticism, with the iShares Expanded Tech-Software Sector ETF (IGV) experiencing the largest outflows of any sector or industry fund over the past week, shedding $530 million.
Global Thematic
Thematic ETFs displayed extreme divergence, highlighting highly specific bets by investors. The blockchain and crypto space was the standout winner, with the CoinShares Bitcoin Mining ETF (WGMI) rocketing 11.59%. In stark contrast, themes related to clean energy and battery technology were heavily sold off. The Global X Lithium & Battery Tech ETF (LIT) plummeted 3.61%, and the Invesco Solar ETF (TAN) fell 3.14%. Investor sentiment also soured on internet stocks, as the First Trust Dow Jones Internet Index Fund (FDN) saw the most significant outflows of any thematic fund, losing $208 million over the last week.
Developed Markets ex-U.S.
International developed markets broadly pulled back, with the iShares MSCI EAFE ETF (EFA) declining 0.33%. The weakness was led by Japanese equities, as the iShares MSCI Japan ETF (EWJ) fell 1.11% on the day. However, there were pockets of strength in Asia, with South Korea (EWY) and Hong Kong (EWH) bucking the trend to post gains of 0.98% and 0.75%, respectively. Despite the daily loss, the broader developed market space (EFA) remains up a strong 24.32% year-to-date.
Emerging Markets
Emerging market equities outperformed their developed counterparts, with the iShares MSCI Emerging Markets ETF (EEM) climbing 0.55%. The gains were driven by strength in large North Asian markets, as China (MCHI) and Taiwan (EWT) advanced 1.08% and 1.05%, respectively. The performance of Chinese equities is particularly notable, with MCHI now boasting a 1-year return of 59.49%. The primary laggard in the space was Indonesia (EIDO), which suffered a sharp 2.51% loss.
Fixed Income
The bond market was relatively quiet ahead of today’s inflation report. The core bond benchmark (AGG) edged down by 0.20%, while longer-duration government bonds (SPTL) saw larger losses of 0.48%. Convertible bonds (CWB) were a bright spot, gaining 0.82% alongside equities. In terms of fund flows, investors continue to pour into the front end of the yield curve, with the iShares 0-3 Month Treasury Bond ETF (SGOV) attracting over $1.4 billion in new assets in the past week alone.
Commodities
It was a mixed session for commodities. Energy-related products gained, with the United States Gasoline Fund (UGA) rising 1.60%. However, precious metals and agriculture saw modest declines. The Invesco DB Precious Metals Fund (DBP) fell 0.51%, and the Invesco DB Agriculture Fund (DBA) shed 0.66%. Despite recent weakness, investor appetite for gold remains robust, as evidenced by the massive $1.95 billion inflow into the SPDR Gold Minishares Trust (GLDM) over the past week.
Cryptocurrency
The digital asset space saw a slight divergence between the two leading assets. Bitcoin ETFs, such as the iShares Bitcoin Trust (IBIT), experienced modest losses of around 0.75%. In contrast, Ethereum-focused funds like the iShares Ethereum Trust (ETHA) were roughly flat, finishing up 0.05%. The most significant story remains in fund flows, where Ethereum funds have seen substantial outflows of $953.72 million over the past week, a stark contrast to the continued inflows into Bitcoin products.
What to Watch Today
The main event on the economic calendar today is the release of the Producer Price Index (PPI) for August. This report measures inflation at the wholesale level and is closely watched as a potential leading indicator for the Consumer Price Index (CPI), which is due tomorrow. Investors will be looking to see if price pressures in the production pipeline are easing or accelerating, as these costs are often passed on to consumers. A higher-than-expected PPI reading could suggest that future consumer inflation will remain sticky, potentially concerning the Federal Reserve. Conversely, a softer number would be a welcome sign that inflationary pressures are abating.
For a deeper dive into the data, access today’s full Daily ETF Data Pack.
This report is for informational purposes only and should not be considered investment advice. This report was generated with assistance from AI.
