If there’s one thing most investors learn it’s that anyone can spin any event any way they wish. We should celebrate that, as that’s what makes a market, after all.
So, with quarterly earnings for the S&P 500 stocks nearly complete, what do we make of this quarter’s chaos? As usual, the past six weeks have brought the usual wide range of results, opinions, and price gyrations for ETFs.
This is a time when ETF investors often breathe a sigh of relief. “At least I owned that stock that tanked as part of a diversified ETF,” they may be saying to themselves. Naturally, there’s plenty of envy on the other side of that coin, with some stocks rocketing higher, while the ETFs that track their sector only received a taste of the gains accruing to investors who owned the stock directly.
Speaking of coins, the clear winner of earnings season was a not a stock or a stock market sector. In fact, it didn’t even report earnings. It is not a stock, not a bond and in the eyes of many not a commodity or even a currency.
It is Bitcoin.
ETFs like the Bitwise Bitcoin ETF (BITB) one of several spot Bitcoin trackers that debuted just before earnings season got rolling around January 12, is up 37% since that point through Tuesday’s close, and added another chunk of gains during Wednesday’s rapid trading.
Tale of the Earnings Tape
In some respects, 2024 looks a lot like 2023. The SPDR S&P 500 Trust (SPY) rose 6.2% from January 12 through Tuesday, yet only four of the 11 sector ETFs that make up that index outperformed that mark.
The most notable sector leader atop the scoreboard this earnings season was Industrials, as tracked by the SPDR Industry Sector Select SPDR ETF (XLI), which is one of the more evenly weighted sectors. That could be a good sign for investors hoping to see a broadening out of the Magnificent Seven and technology stocks. Tech earned 6.5% during the marking period, so it only bested SPY by 0.3%. The financial sector was the runner up to XLI, the communications sector also outperformed SPY.
In the “losers’ bracket” this earnings season were the usual suspects, those which lagged during 2023 as well. Among the worst were Utilities and Real Estate, which each dropped around 2% during that month and a half.
That’s a wrap on the S&P 500 earnings season, from an ETF perspective. Now with that out of the way, investors can focus more on where companies and the macro environment are heading, and watching carefully to see if the leaders versus laggard’s trend continues through April, when we’ll do the earnings season “dance” all over again.