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6 Wining ETF Areas From a Late Santa Rally

Sanghamitra Saha

Albeit a little late, Santa Claus rally has finally set in. It refers to the jump in stock prices in the last few days of December. Factors like tax considerations, happiness due to the holiday season and people investing their Christmas bonuses are some of the factors that give markets a boost this time.

However, this December hasn’t been too festive as global growth worries, no definite solution to U.S.-China trade tensions, constant volatility in the oil patch and a flattening yield curve in the United States bothered the markets.

Still, it’s better late than never and Wall Street saw the actual Santa Claus rally on Boxing Day when stocks staged the biggest single-day jump since March 2009. The S&P 500, the Dow Jones Industrial Average and the NASDAQ Composite advanced about 4.96%, 4.98% and 5.84%, respectively. Let’s take a look which sector ETFs won the most.


Crude prices jumped from a 17-month low on Dec 26 with United States Oil USO and United States Brent Oil BNO gaining about 6.6% each. Positive comments on global supplies by Russian Energy Minister Alexander Novak boosted prices. Per the minister, oil prices would become more stable in the first half of 2019 thanks to the fresh output cut deal by the OPEC and some non-OPEC countries (read: Is Fresh OPEC+ Output Cut Enough to Boost Oil & Energy ETFs?).

Energy companies’ ETFs including iShares US Oil & Gas Exploration & Production ETF (IEO) (up 8.2% on Dec 26), Invesco S&P SmallCap Energy ETF (PSCE) (up 7.7%) and VanEck Vectors Unconventional Oil & Gas ETF (FRAK) (up 7.9%) and First Trust Energy AlphaDEX ETF (FXN) (up 7.8%) were among the highest gainers.


Some of the biotech companies including Endonovo Therapeutics Inc. ENDV, Adial Pharmaceuticals Inc. ADIL, Acorda Therapeutics Inc. ACOR and ArQule Inc. ARQL have lately come up with upbeat news releases.

Probably this is why, biotech ETFs like ALPS Medical Breakthroughs ETF SBIO (up 7.5% on Dec 26), Virtus LifeSci Biotech Clinical Trials ETF BBC (up 7.5%), SPDR S&P Biotech ETF XBI (up 7.3%) and Invesco DWA Healthcare Momentum ETF PTH (up 7.6%) logged outsized gains on Dec 26.


Brutal selloffs in the tech stocks early in the fourth quarter made it reasonably priced and gave every reason to investors to bet big on it. As a result, iShares US Technology ETF (IYW), iShares North American Tech-Software ETF (IGV), iShares North American Tech ETF IGM and ARK Web x.0 ETF ARKW added in the range of 6.3% to 6.5% on Dec 26.

Consumer Cyclicals

In the six-year best holiday shopping season, e-commerce sales surged 18.3% year over year between Nov 1 and Dec 19 boosted by 16.5% growth in apparel sales. Online sales at department stores, electronics and jewelry were also robust, rising between 7-10% (read: Super Saturday the Biggest Shopping Day of 2018? 4 ETF Deals).

These data gave a boost to this online retail fund Online Retail Amplify ETF (IBUY(up 6.4% on Dec 26). The underlying EQM Online Retail Index utilizes a rules-based methodology to select a globally diverse group of companies with 70% or more of revenue from online and virtual sales. The fund charges 65 bps in fees (read: Holiday Sales Strongest in Six Years: ETFs Set to Surge).       

Invesco DWA Consumer Cyclicals Mom ETF (PEZ, which identifies companies that are showing relative strength, also gained 6.9% on that day.  After all, in-store sales grew 4.3% in the same time period, thanks to an accelerating economy, rising consumer confidence and higher spending. 


The broader market jump and probably holiday season travel were the tailwinds to airlines stocks. The airlines fund US Global Jets ETF (JETS) added about 4.5% on Dec 26. The underlying U.S. Global Jets Index tracks the performance of Airline Companies across the globe with emphasis on domestic passenger airlines. It charges 60 bps in fees (read: Transport ETFs & Stocks to Surge on Busy Thanksgiving Travel).


Among industrial ETFs, Invesco DWA Industrials Momentum ETF (PRN) saw the maximum gain of 5.2%. The fund picks shares of companies that are showing relative strength and are composed of at least 30 common stocks from a universe of approximately 3,000 common stocks traded on US exchanges. It charges 60 bps in fees.