Last week was one to forget for U.S. stocks and select exchange traded funds, as high-beta energy and materials stocks continued to be laggards while slack earnings reports from some previous high-flying names weighed on broader benchmarks.
The S&P 500 lost 1.1 percent last week, the worst weekly showing by the benchmark U.S. index in four months, while the Dow Jones Industrial Average to its worst weekly performance since January.
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To this point, nearly 190 (or just under 40 percent) of S&P 500 members have reported earnings and this week is another busy one on the earnings front. Biotechnology ETFs, among this years top-performing sector funds, suffered a blow last Friday, when Biogen Inc (NASDAQ:BIIB) pared 2015 after it reported disappointing results for an experimental drug to treat Alzheimers disease.
Shares of Biogen plunged 22 percent last Friday and would need to climb 60 percent to reclaim the 52-week high. iShares Nasdaq Biotechnology ETF (NASDAQ:IBB), the largest biotech ETF, will again be put to the earnings test this week as Amgenand Gilead Sciencesstep into earnings confessional. Amgen and Gilead combine for almost 15.4 percent of IBBs weight.
Speaking of big-name sector ETFs that will be front-and-center earnings plays this week, look no further than the Energy Select Sector SPDR (NYSE:XLE). Over the course of the week, investors will be treated to earnings reports from Anadarko Petroleum, ConocoPhillips, Occidental Petroleumand Williams Cos.
XLEs earnings parade gets more significant on Friday when Dow components Exxon Mobiland Chevron, the two largest U.S. oil companies, report. The aforementioned energy stocks combine for over 39 percent of XLEs weight. Chevrons earnings update could be particularly important because the company has yet to announce a dividend increase this year, potentially jeopardizing a payout increase streak thatspans 27 years.
Emerging Market ETFs
For the week ended July 22, investors pulled $3.3 billion from emerging markets ETFs and of the almost 150 ETFs that hit 52-week lows last Friday, 26 were emerging markets funds. Of those 26, five were Brazil ETFs and four others were Latin America funds.
That could be a sign a laggard region has more downside ahead. The iShares MSCI Brazil Capped ETF (NYSE:EWZ) is off 14 percent over the past month and currently resides at its lowest levels since early 2009. Investors have pulled nearly $764 million from EWZ this year.
On the note of problematic ETFs, there are gold funds. Data revealed last week show professional traders are net short gold for the first time since such data started being collected in 2006. Last Friday, the SPDR Gold Shares (NYSE:GLD) and the iShares Gold Trust (NYSE:IAU) were two of the 10 worst ETFs for outflows.
With gold miners ETFs densely populating the all-time and 52-week low lists, the Direxion Daily Gold Miners Bear 3X Shares (NYSE:DUST) and the Direxion Daily Gold Miners Bear 3X Shares (NYSE:JDST) merit consideration for the risk-tolerant trader. After all, DUST and JDST are up an average of 90 percent over the past month.
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