Last week was an eventful one, but one that did produce big weekly moves in either direction for the major U.S. equity indexes.
"For October, all three major indexes posted their biggest percentage increases since October 2011, with the S&P 500 rising 8.3 percent, led by energy and materials," Reutersreported.
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Translation: The Energy Select Sector SPDR (NYSE:XLE) and the Materials Select Sector SPDR (NYSE:XLB) finished October with monthly gains of 10.9 percent and 12.2 percent, respectively. Let that sink for a minute because for as impressive as those showings were for XLE and XLB, those ETFs are still 10.4 percent year-to-date, making them two of the worst-performing sector SPDR ETFs. XLE is the worst with a 2015 loss of 14.1 percent.
Keeping with the theme of sector funds, as prosaic as it sounds, the time could be right for the Consumer Discretionary Select Sector SPDR (NYSE:XLY). Classic seasonal trends could bolster what is already this year's top-performing member of the SPDR suite. As noted on Friday, XLY is home to several of this year's best-performing Dow stocks.
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It feels like earnings season is winding down, but one look at next week's earnings calendar proves otherwise. Some other sector funds will take their turns in the earnings limelight in the week ahead. The iShares U.S. Insurance ETF (NYSE:IAK) is not a bad place to start as a fair amount of insurance providers step into the earnings confessional. Additionally, IAK is worth monitoring because insurance companies are sensitive to interest rates, in a positive way, so if Treasury yields climb, so should this ETF.
Fresh off an October gain of 11.4 percent, the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP) will also see some earnings tests in the week ahead. Hint: Those reports are likely to reveal a lot of cost-cutting and downbeat commentary about the current state of the energy sector. The good news is, markets have priced most of that in.
The iShares U.S. Pharmaceuticals ETF (NYSE:IHE) might be worth watching for the duration of November as Pfizer Inc. (NYSE:PFE) and Allergan Plc (NYSE:AGN) work towards a marriage. As Benzinga noted last week, IHE has one of the largest combined weights to those two stocks of any ETF. Media reports out Friday indicate the two companies want to finalize a deal by Thanksgiving.
Here's a fun fact that could reveal some clues about the level of risk appetite currently being displayed by investors while potentially also revealing clues about what to expect in the coming weeks: Of last week's 20 top-performing non-leveraged ETFs, 19 either energy, healthcare or Internet funds and all of those funds were up at least 2.9 percent on the week.
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