Nastassia Samal
The Federal Reserve’s interest rate decision will headline Wall Street’s calendar of events next week, with impacts rippling through virtually every aspect of the financial markets. As the Fed assesses the near-term future of monetary policy, Treasury ETFs step into the spotlight.
At the same time, bank ETFs will remain a priority for many traders. Meanwhile, investors will also receive the latest round of earnings from big players such as Nike (NYSE: NO) and General Mills (NYSE: SIG), which will affect specific ETFs that maintain larger weightings to these two companies.
US Treasury ETFs
The Fed is expected to release its latest policy decision on March 22. The turmoil in the banking sector appears to have taken a 50 basis point hike off the table, with Wall Street now torn between whether the central bank will suspend rate hikes or announce a 25 basis point hike.
At the close of trading on Friday, Wall Street had put a 35.8% chance that rates would remain unchanged after the meeting. This compares to a perceived probability of 64.2% that markets will see a 25 basis point rise.
These political projections will more than likely boost trading activity in the bond market, as market participants assimilate the latest comments from Fed Chairman Jerome Powell. This, in turn, will influence ETFs linked to the Treasury and bond markets.
ETFs to watch:
- iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT)
- iShares 10-20 Year Treasury Bond ETF (NYSEARCA:TLH)
- iShares 7-10 Year Treasury Bond ETF (NASDAQ:IEF)
- iShares 3-7 Year Treasury Bond ETF (NASDAQ: IEI)
- iShares 1-3 Year Treasury Bond ETF (NASDAQ: SHY)
Banking/Financial ETFs
As investors continue to worry about the ongoing fallout generated by the recent turmoil in the banking sector, ETFs tied to the sector will remain front and center. These funds will act as signals of confidence in the sector as industry leaders and regulators attempt to restore stability and confidence in the system.
Bank ETFs:
- Invesco KBW Bank ETF (NASDAQ: KBWB)
- SPDR S&P Bank ETF (NYSEARCA:KBE)
- First Trust Nasdaq Bank ETF (NASDAQ: FTXO)
- SPDR S&P Regional Banking ETF (NYSEARCA: KRE)
- iShares US Regional Banks ETF (NYSEARC:IAT)
Financial ETFs:
- Selected Financial Sector SPDR Funds (NYSEARCA:XLF)
- Vanguard Financials ETF (NYSEARCA:VFH)
- iShares US Financials ETF (NYSEARCA: IYF)
- Fidelity MSCI Financial Services Index ETF (NYSEARCA: FNCL)
ETFs attached to Nike
Nike (NKE) will release its quarterly results on Tuesday, March 21. Analysts expect the athletic footwear and apparel maker to post EPS of $0.54 and revenue of $11.44 billion.
NKE can be found in 292 different exchange-traded funds, but here are some of the ETFs that have the largest weightings to the stock.
ETFs to watch:
- Optimize AI Smart Sentiment Event-Driven ETF (OAIE) with a weighting of 7.01%
- SPDR Consumer Discretionary ETF (NYSEARCA:XLY) at a weighting of 4.53%
- Monarch Blue Chips Core ETF (MBCC) with a weighting of 4.16%
- Direxion Daily Consumer Discretionary Bull 3X Shares (WANT) with a weighting of 3.86%
- American Century Focused Dynamic Growth ETF (FDG) with a weighting of 3.70%
ETFs attached to General Mills
On Thursday, General Mills (GIS) will announce its financial figures. Wall Street is looking for EPS of $0.92 and revenue of $4.59 billion. Additionally, GIS is owned by 257 listed index funds. The list below shows the funds that have the largest portfolio positions in General Mills.
ETFs to watch:
- First Trust Nasdaq Food & Beverage ETF (FTXG) with a weighting of 8.03%
- Invesco Dynamic Food & Beverage ETF (PBJ) with a weighting of 5.04%
- Amplify CWP Enhanced Dividend Income ETF (DIVO) at 3.94% weighting
- iShares MSCI Water Management Multisector ETF (IWTR) with a weighting of 3.79%
- Invesco S&P 500 Equal Weight Consumer Staple ETF (RHS) with a weighting of 2.95%
