Weekly Returns: Benchmarks and ETFs 10-11-26

A comeback week was supported by energy names rebounding and a mild long UST rally supporting dividend stocks and bond ETFs.

The weekly returns across the broader group of 32 benchmarks and ETFs show a favorable score of 24 positive returns and only 8 in negative range, but the next layer of the return profiles are mixed. The 4 major benchmarks did not make the top quartile with the S&P 500 and NASDAQ in the 2^nd quartile, the Midcaps (MDY) at the bottom of the 3^rd quartile, and the small cap Russell 2000 in the bottom quartile. That said, the S&P 500 showed 9 of its 11 sectors in positive range. The Equal Weight S&P 500 ETF (RSP) was also in the 2^nd quartile.

We see some of the quality dividend stocks up near the top as long UST rates edged lower. The curve supported the 7 bond ETFs in positive range (see Weekly UST Deltas: Moving Parts 10-10-26). Despite the UST curve ending on a positive note, the mortgage story keeps getting worse with Freddie ending the week at 7.4%.

As we cover in other commentaries, the current 10Y UST is higher than when mortgage rates saw the 7.63% Freddie rate back in Oct 2023. That does not bode well for housing. The fall of 2023 saw Freddie hit highs and a broader mix of mortgages were near 8% in numerous mortgage surveys (see Mortgage Creep Continues, Curve Shapeshifting Uncertain 10-4-26).

This past week, the Homebuilder ETF (XHB) finished in 2^nd to last in the bottom quartile, and that offers another reminder on housing pressures as we await the Sept quarter earnings reports and guidance from homebuilders.

The winners this week included the dividend-heavy Utility ETF (XLU) and Consumer Staples ETF (XLP). The Energy ETF (XLE) and E&P (XOP) landed in the top 5. Those two are in the top 2 rankings YTD as well. Interestingly, the more dividend-driven Midstream ETF (AMLP) with its 7.7% dividend yield was “down at the top of the bottom” quartile this week (say that 10x quickly). Real Estate (XLRE) and Financials (XLF) also made the top quartile this week.

The week ahead will kick off earnings season for major banks and financials followed in the coming days by a long tail of Regional Bank ETF (KRE) constituents. We get the Taiwan Semi (TSM) earnings report this week. TSM is in the bottom quartile of our “Tech Check” return list this week and in the top quartile YTD. We will cover the tech mix in a separate commentary.