Best-Performing ETF Sectors in August with Gains of 20% or More

Market Performance Overview

• S&P 500 and Dow Jones Gains: The S&P 500 achieved a 1.5% increase in August, marking its fourth consecutive month of gains, while the Dow Jones rose by 3.2%, also reflecting four months of growth. Notably, the S&P 500 reached a record high during this period.
• Nasdaq's Winning Streak: The Nasdaq Composite recorded a 1.6% gain, achieving its fifth consecutive monthly rise, the longest winning streak in over a year and a half.

Small-Cap Stocks and Inflation Concerns

• Russell 2000 Performance: Small-cap stocks, represented by the Russell 2000, surged approximately 7% in August, marking its fourth consecutive monthly gain and the strongest performance in over four years.
• Inflation Data Impact: Recent government data revealed that the core personal consumption expenditures price index rose by 2.9% in July, meeting estimates but higher than June's figures. This increase is concerning as it is the highest since February, raising worries about inflation remaining above the Federal Reserve's 2% target.

Consumer Sentiment and Fed Rate Cut Expectations

• Decline in Consumer Sentiment: Consumer sentiment fell to a three-month low in August, driven by concerns over tariffs and inflation, with respondents expecting faster inflation in the coming year.
• Rate Cut Speculations: Despite the inflation data, traders are pricing in an 86.4% chance of a quarter-point rate cut in September, indicating confidence that the Federal Reserve may ease monetary policy in response to a slowing labor market.

Tech Stocks Volatility and AI Bubble Concerns

• Tech Sector Pullback: The tech sector experienced volatility, particularly towards the end of August, with fears of an AI bubble. The Nasdaq Composite fell about 1.2% on the last day of the month, led by significant declines in major tech stocks.
• Notable Stock Movements: On August 29, NVIDIA shares dropped over 3.3%, Tesla fell 3.5%, Meta Platforms decreased by 1.7%, and Amazon.com saw a decline of over 1.1%.

Top Performing ETFs in August

• Roundhill Cannabis ETF (WEED): This ETF surged by 91.3% in August, driven by speculation regarding potential reclassification of marijuana by President Trump.
• Amplify Seymour Cannabis ETF (CNBS): It experienced an 83.2% increase, reflecting the broader cannabis market's growth.
• KraneShares SSE STAR Market 50 Index ETF (KSTR): This ETF rose by 29.7%, focusing on the largest companies on the SSE Science and Technology Innovation Board.
• Sprott Active Gold & Silver Miners ETF (GBUG): It gained 25.5%, targeting companies involved in gold and silver mining.
• VanEck ChiNext ETF (CNXT): This ETF increased by 25%, tracking the performance of major China A-share stocks.
• CoinShares Bitcoin Mining ETF (WGMI): It rose by 23.9%, providing exposure to companies engaged in bitcoin mining operations.

Conclusion

• The market showed resilience with notable gains across major indexes despite inflation concerns and a decline in consumer sentiment. The tech sector faced challenges, while specific ETFs, particularly in the cannabis and mining sectors, demonstrated significant growth.