Wall Street was in the red last week. The S&P 500 lost 0.4%, the Dow Jones retreated 1.3%, and the Nasdaq was off 0.6%. Israel-Iran tensions weighed on the broader equity market sentiments. However, safe-haven gold bullion ETF SPDR Gold Trust (GLD) advanced 3.6% (read: S&P 500 ETFs Hover Near Record Highs: 5 Stocks Aiding the Rally).
Last week, Israel launched a series of airstrikes on Iran’s nuclear and ballistic missile facilities, targeting key infrastructure and military leaders. The move heightened geopolitical tensions and triggered a wave of risk-off sentiment across global markets.
Iran also retaliated, raising concerns about disruptions and contagion in neighboring oil-producing nations. Both countries have been trading missiles. Per the latest update, Israeli unmanned aerial vehicles struck the South Pars gas field in southern Iran on Saturday. The strikes hit two natural gas processing facilities, according to state media, as quoted on CNBC.
Meanwhile, U.S. consumer prices rose modestly in May, indicating that President Donald Trump’s tariffs have not yet had a significant impact on inflation. The Consumer Price Index (CPI) rose by just 0.1% in May, falling short of the 0.2% monthly increase projected by a Dow Jones survey, as quoted on CNBC.
This puts the annual inflation rate at 2.4%, matching economists’ expectations for the year. This kind of soft inflation data may help the Fed to cut rates in the near term and boost stocks (read: Sector ETFs Likely to Gain on May Inflation Data).
ETF Winners
Against this backdrop, below we highlight a few winning exchange-traded fund (ETF) areas of last week.
Oil – United States Oil ETF USO – Up 12.4% Last Week
Oil prices skyrocketed on June 13, following a major military escalation in the Middle East. The level was the highest in four months. Rising tensions after Israeli strikes on Iran have reignited concerns that Tehran might retaliate by targeting the Strait of Hormuz — one of the world’s most critical oil chokepoints.
This narrow passage, linking the Persian Gulf to the Arabian Sea, handles around 20 million barrels of oil and petroleum products daily, representing nearly 20% of global oil trade. Any disruption could send shockwaves through the global energy markets.
Volatility – iPath Series B S&P 500 VIX Short-Term Futures ETN VXX – Up 9.2%
The ongoing uncertainty has triggered sharp market swings as investors could react to potential supply shocks and economic fallout. Volatility ETFs, which are designed to gain value during periods of market turbulence, tend to surge under such conditions. As fear and instability drive rapid changes in asset prices, demand for these ETFs increases, reflecting investors’ efforts to hedge against or profit from the chaos.
Shipping – Breakwave Dry Bulk Shipping ETF BDRY – Up 8.3%
As tensions escalated in the Middle East and fears grew over potential disruptions to the Strait of Hormuz, shipping stocks probably saw a surge. The risk of supply-chain interruptions has probably driven up freight rates, especially for oil tankers and cargo vessels rerouting to avoid conflict zones. The underlying Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC Index of BDRY measure rates for shipping dry bulk freight.
Energy – Invesco Energy Exploration & Production ETF PXE – Up 7.7%
The underlying Dynamic Energy Exploration & Production Intellidex Index is composed of stocks of 30 U.S. companies involved in the exploration and production of natural resources used to produce energy. As oil prices rose, oil exploration companies saw a surge in prices.
Uranium – Global X Uranium ETF URA – Up 5.4%
Global X Uranium ETF provides investors access to a broad range of companies involved in uranium mining and the production of nuclear components, including those in extraction, refining, exploration, or manufacturing of equipment for the uranium and nuclear industries.
Climate change initiatives, global militarization and a widening supply-demand deficit boosted uranium prices. Uranium is a key component in nuclear power generation. The AI-driven energy boom is also fueling fresh demand for uranium.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX): ETF Research Reports United States Oil ETF (USO): ETF Research Reports Global X Uranium ETF (URA): ETF Research Reports Invesco Energy Exploration & Production ETF (PXE): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
