December has been a brutal month for the U.S. stock market. Recession fears triggered by the return of the Fed’s hawkish tone led to risk-off trading. Weak results from Micron Technology
MU
and Tesla
TSLA
added to the chaos. The S&P 500 Index and the Dow Jones Industrial Index are down 5.8% and 4%, respectively, so far in December, while the tech-heavy Nasdaq Composite Index has lost 8.5%.
While most segments of the market are suffering from huge losses, a few, such as
Global X Education ETF
EDUT
,
Global X Social Media Index ETF
SOCL
,
Global X Gold Explorers ETF
GOEX
,
iShares Virtual Work and Life Multisector ETF
IWFH
and
VanEck Vectors Pharmaceutical ETF
PPH
, have performed really well. These are likely to continue outperforming should the trends prevail.
Here’s How Markets Fared in December
The Federal Reserve has raised interest rates by 50 bps this month and revealed a hawkish view for next year. This marks the seventh rate hike this year in an unprecedented move to rein in inflation. The rate hike takes the benchmark interest rate to 4.25-4.50%, the highest level in 15 years. The central bank now projects at least 75 bps of rate hike, peaking at 5.1% by the end of 2023, 50 bps higher than the previously projected 4.6% back in September. The rate will then be cut to 4.1% in 2024 (read:
Top-Ranked ETFs to Play Fed’s Seventh Rate Hike of 2022
).
The hike came despite the fact that inflation is cooling down gradually. The consumer price index jumped 7.1% year over year in November, down from a 7.7% year-over-year increase in October and a recent peak of 9.1% in June. This represents the lowest annual increase since late 2021. Further, Americans have regained confidence in the U.S. economy, with consumer confidence bouncing back in December and reversing consecutive declines in October and November to reach its highest level since April.
Additionally, the latest bouts of data indicate an improving economy. The economy added 263,000 jobs in November, marking another strong month of job growth. The unemployment rate remained at 3.7%, close to a 50-year low, while average hourly earnings jumped 0.6% from the prior month and 5.1% from the year-ago month.
Meanwhile, business activity jumped the most since March 2021 in November, suggesting that the largest part of the economy remains resilient. ISM’s gauge of services rose to 56.5 last month from 54.4 in October. Further, two surveys point to strong consumer confidence.
Consumer sentiment improved in early December, with the University of Michigan’s Consumer Confidence Index rising to 59.1 from 56.8 in November. The consumer confidence bounced back in December, reversing consecutive declines in October and November to reach its highest level since April. The Conference Board Consumer Confidence Index climbed to 108.3 from 101.4 in November.
Global X Education ETF (EDUT) – Up 6.8%
Global X Education ETF seeks to invest in companies providing products and services that facilitate education, including online learning and publishing educational content, as well as those involved in early childhood education, higher education, and professional education. It follows the Indxx Global Education Thematic Index and holds 33 stocks in its basket. Consumer discretionary takes the largest share at 52.2%, while communication services and information technology round off the next two spots.
Global X Education ETF has accumulated $3.5 million in its asset base and charges 50 bps in annual fees from investors. It trades in a paltry volume of 1,000 shares a day on average.
Global X Social Media Index ETF (SOCL) – Up 6.7%
Global X Social Media Index ETF provides investors access to social media companies around the world and has amassed $121 million in its asset base. It tracks the Solactive Social Media Total Return Index, holding 46 securities in the basket.
Global X Social Media Index ETF charges 0.65% in annual fees and sees lower trading volumes of roughly 30,000 shares a day. The fund has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.
Global X Gold Explorers ETF (GOEX) – Up 4.9%
Global X Gold Explorers ETF provides exposure to companies involved in the exploration of gold deposits and tracks the Solactive Global Gold Explorers & Developers Total Return Index. It is home to 57 stocks, and Canadian firms dominate the fund’s return at 46.9%, followed by Australia (23.7%) and the United States (9%).
Global X Gold Explorers ETF is unpopular and illiquid, with AUM of $35.4 million and an average daily volume of 5,000 shares. The expense ratio comes in at 0.65% (read:
Gold Mining ETFs That Took Flight Last Week
).
iShares Virtual Work and Life Multisector ETF (IWFH) – Up 4.5%
iShares Virtual Work and Life Multisector ETF provides access to companies at the forefront of virtual and remote working, and living innovation. It offers exposure to global companies that provide products, services and technologies empowering individuals to work remotely, and support an increasingly virtual way of life across entertainment, wellness and learning. iShares Virtual Work and Life Multisector ETF follows the NYSE FactSet Global Virtual Work and Life Index.
Holding 74 stocks in its basket, iShares Virtual Work and Life Multisector ETF has accumulated $2.7 million in its asset base. It charges 47 bps in annual fees and trades in a paltry volume of under 500 shares.
VanEck Vectors Pharmaceutical ETF (PPH) – Up 3.8%
VanEck Vectors Pharmaceutical ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 25 stocks in its basket. The product has amassed $583.2 million in its asset base and trades in a good volume of about 120,000 shares a day. The expense ratio is 0.35% (read:
Amgen to Buy Horizon Therapeutics: ETFs to Bet On
).
VanEck Vectors Pharmaceutical ETF carries a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
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