Wall Street Rebounds as Inflation Cools: ETF Winners

Wall Street strongly rebounded on dual tailwinds of cooling inflation data and a slew of solid earnings results from the financial sector. All three major indexes registered their biggest daily percentage gains since Nov. 6. The Dow Jones Industrial Average and the S&P 500 rose 1.6% and 1.8%, respectively, while the Nasdaq Composite jumped 2.4% on Wednesday (read: Can Dow Jones ETFs Fare Better in New Year Than 2024?). 

Given the broad-based surge, we have highlighted five ETFs from different sectors that gained the most on the day. These include Valkyrie Bitcoin Miners ETF WGMI, Simplify Volt TSLA Revolution ETF TESL, Global X Blockchain ETF BKCH, Invesco KBW Bank ETF KBWB and Sprott Lithium Miners ETF LITP.

Inflation Eases

Inflation in December eased for the first time since July, bolstering the case that the Fed’s interest rate-cutting cycle is not over yet. Excluding volatile food and energy costs, so-called core prices rose 0.2% over the prior month, a deceleration from November's 0.3% monthly gain. On an annual basis also, core inflation growth dropped to 3.2% from November's increase of 3.3%. The Consumer Price Index grew 2.9% annually in December, up from 2.7% annual growth in November but matched economist expectations.

According to the latest CME's FedWatch tool, traders raised the probability of the Fed cutting its target rate at the June meeting to about 66% from about 58% on Tuesday. The Fed has penciled in two quarter-point cuts this year but strong job growth and signs of renewed inflation have been pushing back any likely move later into the year.

Bank Earnings Impress

Investors' sentiment was further boosted by impressive bank earnings results from the likes of JPMorgan Chase (JPM) and Goldman Sachs (GS). These firms reported surging profits thanks to a dealmaking revival and investment banking strength. BlackRock (BLK), Wells Fargo (WFC) and BNY (BK) also came out with blockbuster results.

ETFs That Gained the Most

Valkyrie Bitcoin Miners ETF (WGMI) – Up 6.5%

Valkyrie Bitcoin Miners ETF is an actively managed ETF that invests at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenues or profits from bitcoin mining operations and/or from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. Valkyrie Bitcoin Miners ETF holds 20 stocks in its basket with a double-digit concentration on the top two firms. It has amassed $189.9 million in its asset base while trading in an average daily volume of 702,000 shares. WGMI charges 75 bps in annual fees.

Simplify Volt TSLA Revolution ETF (TESL) – Up 6.4%

Simplify Volt TSLA Revolution ETF uses an active management strategy to capture the potential of Tesla’s stock price movements while implementing an advanced options overlay to manage downside risks. It has an expense ratio of 0.24% and AUM of $19.9 million (read: Tesla Slips on Q4 Delivery Miss: ETFs in Focus). 

Global X Blockchain ETF (BKCH) – Up 6.2%

Global X Blockchain ETF seeks to invest in companies positioned to benefit from the increased adoption of blockchain technology, including companies in digital asset mining, blockchain and digital asset transactions, blockchain applications, blockchain and digital asset hardware, and blockchain and digital asset integration. Global X Blockchain ETF follows the Solactive Blockchain Index and holds 25 stocks in its basket. It has gathered $173.1 million in its asset base and trades in an average daily volume of 87,000 shares. BKCH charges 50 bps in annual fees.

Invesco KBW Bank ETF (KBWB) – Up 4.1%

Invesco KBW Bank ETF provides exposure to 26 leading national money centers and regional banks or thrifts. It follows the KBW Nasdaq Bank Index. Invesco KBW Bank ETF is concentrated on the top five firms that make up about 8% share each. It has managed $2.8 billion in its asset base and trades in a solid volume of 1.3 million shares per day on average. The expense ratio comes in at 0.35%. KBWB has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: ETF Wisdom From Warren Buffett on Berkshire's 9th Straight Yearly Win).

Sprott Lithium Miners ETF (LITP) – Up 4%

Sprott Lithium Miners ETF is a pure-play U.S.-listed ETF focused on lithium mining companies that provide the critical minerals necessary for the clean energy transition. It follows the Nasdaq Sprott Lithium Miners Index, holding 38 stocks in its basket. Sprott Lithium Miners ETF has gathered $6.5 million in its asset base and charges 65 bps in annual fees. It trades in an average daily volume of 10,000 shares.

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