Bulls Regain Momentum After Fed's Reassuring Start At Jackson Hole: 5 ETF Reactions

Markets displayed a response Friday to the Federal Reserve’s Jackson Hole symposium that defied pre-event concerns.

The first day of the annual Fed conference unveiled a mix of hawkish and dovish insights from the Federal Reserve, ultimately providing a reassuring tone to investors.

Fed Chair Jerome Powell‘s statements carried significant weight. Despite underlining the Fed’s commitment to raise rates further if necessary, Powell also remarked that it will proceed carefully and base decisions on data-driven assessments.

The event featured a lineup of prominent Fed officials, including Philadelphia Fed President Patrick Harker, Chicago Fed President Austan Goolsbee and Cleveland Fed President Loretta Mester. Harker and Goolsbee, both voting members of the FOMC, struck a dovish note, in contrast to Mester’s hawkish stance.

Speculators, sensing potential policy shifts, raised their bets on a rate hike in November, pushing implied probabilities above 50%. Despite this uncertainty, the broader market showcased resilience during the symposium’s opening day Friday.

All three major U.S. stock indices concluded the session on a positive note, demonstrating a collective upward trajectory. The S&P 500’s 11 sectors followed suit, with every sector in the green. Volatility, gauged by the “Vix” fear index, saw a notable drop of 10%, reflecting calmer market sentiment.

Amid this backdrop, a snapshot of five major ETFs reveals intriguing insights:

1. SPDR S&P 500 ETF Trust SPY

The SPY ETF turned the tide with a 0.8% increase, snapping a streak of three consecutive weeks of losses. The ETF closely mirroring the S&P 500 index enjoyed positive price action throughout the latter half of the trading day. Friday’s rebound partially offset the 3.5% dip observed since the beginning of the month. Notably, Hasbro Inc. HAS emerged as the top performer within the SPY, marking a 6.7% gain for the day.

2. Technology Select Sector SPDR Fund XLK

Friday saw the technology sector taking the lead in performance, as the XLK surged by 1.3%. Despite widespread expectations that hawkish remarks from Jackson Hole might exert pressure on tech giants, this did not materialize.

Likewise, the day’s gains only managed to partially offset Thursday’s losses, leaving XLK down by 5.4% since the beginning of August.

Intuit Inc. INTU emerged as the top performer, displaying a notable 4.5% increase.

3. Energy Select Sector SPDR Fund XLE

Securing the second spot in daily performance among S&P 500 sectors is the energy sector, with a robust 1.2% upswing. This surge was primarily propelled by escalating oil and natural gas prices. WTI crude oil confidently crossed the $80 per barrel mark, up 1.8%, while natural gas echoed the sentiment with an equally robust 1.8% surge. Among energy stocks, Valero Energy Corp. VLO emerged as the leader of the pack, charting a substantial 4.5% gain for the day.

4. iShares Russell 2000 ETF IWM

The Russell 2000 index responded positively, notching a 0.6% daily gain. Nevertheless, the index has posted a 6.5% decline month-to-date, reflecting the small cap’s underperformance in comparison to other prominent indices.

The standout of the day is Cano Health, Inc. CANO, soaring by an astonishing 46% within the day’s trading, despite having plummeted by as much as 85% during the preceding week.

5. Vanguard Growth ETF VUG

Mitigated concerns about the Federal Reserve potentially over-tightening sparked a surge in the growth segment, overshadowing its value counterpart.

The Vanguard Growth ETF surged by 1.1%, outperforming the Vanguard Value ETF VTV which marked a more modest 0.7% increase.

Standing out among growth stocks is Workday Inc. WDAY, achieving a noteworthy 6% gain, setting it apart from the competition.