ETF Areas That Spooked Investors In October

The end of October can only be remembered for Halloween,a spooky celebration. And true to its reputation, October scared Wall Street investors. The entire month was tumultuous for stocks thanks to rising rate worries, overvaluation concerns, U.S.-Sino trade tensions and the resultant pressure on global growth (read: 4 Low-Risk ETFs as the S&P 500 Turns Red for 2018).

Big three U.S. ETFs — SPDR S&P 500 ETF (NYSE:SPY) SPY, SPDR Dow Jones Industrial Average (NYSE:DIA) ETF (V:DIA) and Invesco QQQ Trust QQQ — have lost about 8.2%, 7.1% and 10.9% this month (as of Oct 30, 2018). Meanwhile, all-world ETF iShares MSCI ACWI ETF ACWI has shed about 8.7% (read: Forget Spooky Market, 4 Halloween ETF Treats for Investors).

Against this backdrop, below we highlight a few ETF areas that lost the most in the Halloween month and scared investors out of their wits.

Marijuana

Marijuana stocks were on a tear in the third quarter courtesy of growing legalization of the plant for recreational use. Global beverage companies are taking huge interest in it to create a new cannabis-induced product line. However, after an amazing surge over the past few months, marijuana ETF plunged in October as Canada’s legalization in mid-month was overbought. Profit booking probably made this once-soaring space dive in October and ETFMG Alternative Harvest ETF MJ lost 26.9% past month (as of Oct 30, 2018)(read: Canada Legalizes Marijuana: Stocks & ETF in Focus).

Biotech

Along with the broader market slump, “disappointing clinical trial results for experimental cancer therapies” from some drug makers are believed to have caused the crash in the biotech space in October. Virtus LifeSci Biotech Clinical Trials ETF (MZ:BBC) (down 22.4%), Loncar Cancer Immunotherapy ETF (CNCR) (down 20.9%) and Virtus LifeSci Biotech Products ETF (BS:BBP) (down 19.9%) are some of the biotech ETFs that have taken a beating.

Growth & Momentum

With Wall Street seeing a bloodbath in October and fears of growth reaching a peak in the United States, it is no wonder that growth and momentum stocks would suffer. Alpha Architect US Quantitative Momentum ETF QMOM (down 17.9%), Innovator IBD 50 ETF (FFTY) (down 18.7%) and Invesco DWA NASDAQ Momentum ETF DWAQ (down 17.2%) are some of the ETFs that lost a lot in the month(read: Further Selloffs Ahead? ETF Strategies to Follow).

China Technology

The ongoing clash with the United States over technology and trade probably has punished the space. The U.S. Commerce Department announced on Oct 29 that it is “restricting American companies from selling crucial software and technology to Fujian Jinhua Integrated Circuit Co.” in the interest of national security. The embargo could put down Chinese chipmakers considerably.

Then there was disappointing earnings from one of China’s tech superpowers – Alibaba (NYSE:BABA) . Invesco China Technology ETF CQQQ (down 19.4%) and Global X NASDAQ China Technology ETF QQQC (down 20.2%) were hit hard in the month (read: Alibaba's Earnings & Revenue Miss Drags Down These ETFs).

Energy

Oil prices were on a downtrend in the month, hitting global energy companies. Slower global growth and worries of pipeline constraints played foul for the sector. Invesco S&P SmallCap Energy ETF (NYSE:XLE) PSCE (down 21.4%), SPDR S&P Oil & Gas Equipment & Services (NYSE:XES) ETF XES (down 19.1%), SPDR S&P Oil & Gas Exploration & Production (NYSE:XOP) ETF (V:XOP) (down 19.2%) are some of the companies that took a hit.

Online Retail

Though it is a booming segment, the Halloween month did not go well with online retail companies. First of all, there was a broad-based selloff and then the space behemoth Amazon (NASDAQ:AMZN) offered weak guidance. ProShares Online Retail ETF ONLN (down 6.7%) and Amplify Online Retail ETF IBUY (down 13%) lost moderately in October (read: Amazon Beats on Q3 Earnings, Guides Weak: ETFs to Watch).

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