Interesting Facts and Market Dynamics
The financial markets displayed impressive growth between September 16 and 20, with notable performances across various sectors. The technology-heavy NASDAQ-100 (tracked by QQQ) led the way, showing a return of 5.93%, largely driven by renewed investor interest in tech companies and the ongoing advancements in artificial intelligence and semiconductor industries. The broader S&P 500 (tracked by SPY) posted a solid return of 4.07%, signaling a strong performance from large-cap stocks. Small-cap stocks, represented by IWM (Russell 2000), gained 4.84%, while the Dow Jones Industrial Average (DIA) showed the most modest return at 2.58%.
An interesting dynamic in the market was the divergence in volatility. Large-cap stocks, despite showing strong returns, faced increased uncertainty, as evidenced by a 26% rise in the VIX. On the other hand, the NASDAQ's volatility index (VXN) only increased by 17%, indicating lower perceived risk in tech stocks, even though they delivered the highest returns. Small-cap stocks remained relatively stable, with the RVX rising just 9.24%, while volatility in the Dow Jones (VXD) rose by 23%, underscoring the mixed sentiment surrounding large industrials.
Globally, financial markets exhibited a robust performance across key asset classes. Cryptocurrencies had a notable week, with Bitcoin (BTC) rising by 8.95% and Ethereum (ETH) gaining 8.38%. These gains reflect growing institutional interest and optimistic sentiment around decentralized finance and blockchain technology.
On the equity side, small-cap stocks stood out with IWM gaining 5.17%, indicating strong investor confidence in smaller companies that often benefit from domestic economic growth and entrepreneurial innovation. In contrast, inverse ETFs designed to profit from falling markets, such as SPXS (-4.80%), SQQQ (-4.83%), and SPXU (-4.86%), showed significant declines, indicating the overall bullish sentiment that drove the market higher throughout the week.
Sector performance for the week was led by industrials and energy. The First Trust RBA American Industrial Renaissance ETF (AIRR) gained an impressive 7.55%, boosted by strong manufacturing data and a resurgence in demand for industrial goods. The energy sector followed closely behind, with the VanEck Oil Services ETF (OIH) rising 7.19%, as oil prices surged due to supply constraints and geopolitical tensions.
On the flip side, consumer staples experienced a downtrend, with the Consumer Staples Select Sector SPDR (XLP) losing 0.84%, and the Fidelity MSCI Consumer Staples ETF (FSTA) dropping 1.09%. The weakness in this traditionally defensive sector reflects investors' rotation toward riskier, higher-growth areas of the market amid broader optimism.
International markets also posted solid gains during the week. The VanEck Brazil Small-Cap ETF (BRF) rose by 5.18%, reflecting the resilience of Brazil’s domestic economy and improving commodity prices, which heavily influence the nation’s exports. In Australia, the Franklin FTSE Australia ETF (FLAU) gained 2.92%, supported by strong mining and natural resources sectors.
Asian markets, while positive, underperformed compared to other regions. The iShares MSCI All Country Asia ex Japan ETF (AAXJ) climbed by 2.72%, while the Vanguard FTSE Pacific ETF (VPL) posted a modest gain of 0.76%. Latin American markets were mixed, with the iShares MSCI Brazil ETF (EWZ) rising 0.68% and the iShares Latin America 40 ETF (ILF) up just 0.47%, indicating slower growth momentum across the broader region.
Summary
In summary, the week of September 16-20 was marked by strong performances across both domestic and international markets, driven by a resurgence in growth stocks, particularly in the tech and industrial sectors. SPY, QQQ, IWM, and DIA all delivered positive returns, with QQQ leading the charge. Volatility trends varied, with large-cap stocks showing heightened uncertainty while small-cap and tech stocks exhibited relative stability. Energy and industrials were the top-performing sectors, while consumer staples lagged behind, highlighting a rotation toward growth-oriented areas. Global markets were similarly strong, with Brazil and Australia showing particular resilience. Cryptocurrencies, led by Bitcoin and Ethereum, continued their upward trajectory, reflecting broader optimism about the future of digital assets.