ETF Areas That Spooked Investors In October
Zacks Investment Research | Oct 31, 2018 02:30AM ET
The end of October can only be remembered for Halloween,a spooky celebration. And true to its reputation, October scared Wall Street investors. The entire month was tumultuous for stocks thanks to rising rate worries, overvaluation concerns, U.S.-Sino trade tensions and the resultant pressure on global growth (read: Forget Spooky Market, 4 Halloween ETF Treats for Investors ).
Against this backdrop, below we highlight a few ETF areas that lost the most in the Halloween month and scared investors out of their wits.
Marijuana
Marijuana stocks were on a tear in the third quarter courtesy of growing legalization of the plant for recreational use. Global beverage companies are taking huge interest in it to create a new cannabis-induced product line. However, after an amazing surge over the past few months, marijuana ETF plunged in October as Canada’s legalization in mid-month was overbought. Profit booking probably made this once-soaring space dive in October and ETFMG Alternative Harvest ETF Canada Legalizes Marijuana: Stocks & ETF in Focus ).
Biotech
Along with the broader market slump, “disappointing clinical trial results for experimental cancer therapies ” from some drug makers are believed to have caused the crash in the biotech space in October. Virtus LifeSci Biotech Clinical Trials ETF (MZ:BBC) (down 22.4%), Loncar Cancer Immunotherapy ETF (CNCR) (down 20.9%) and Virtus LifeSci Biotech Products ETF (BS:BBP) (down 19.9%) are some of the biotech ETFs that have taken a beating.
Growth & Momentum
With Wall Street seeing a bloodbath in October and Further Selloffs Ahead? ETF Strategies to Follow ).
China Technology
The ongoing clash with the United States over technology and trade probably has punished the space. The U.S. Commerce Department announced on Oct 29 that it is “restricting American companies from selling crucial software and technology to Fujian Jinhua Integrated Circuit Co.” in the interest of national security. The embargo could put down Chinese chipmakers considerably.
Then there was disappointing earnings from one of China’s tech superpowers – Alibaba (NYSE:BABA) . Invesco China Technology ETF Alibaba's Earnings & Revenue Miss Drags Down These ETFs ).
Energy
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Oil prices were on a downtrend in the month, hitting global energy companies. Slower global growth and worries of pipeline constraints played foul for the sector. Invesco S&P SmallCap Energy ETF (NYSE:XLE) XES (down 19.1%), SPDR S&P Oil & Gas Exploration & Production (NYSE:XOP) ETF (V:XOP) (down 19.2%) are some of the companies that took a hit.
Online Retail
Though it is a booming segment, the Halloween month did not go well with online retail companies. First of all, there was a broad-based selloff and then the space behemoth Amazon (NASDAQ:AMZN) offered weak guidance. ProShares Online Retail ETF Amazon Beats on Q3 Earnings, Guides Weak: ETFs to Watch ).
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