ECONOMIC SILUET: A good day for these fintech names, investors may want to check out equal-weighted funds

TUE, JAN 03, 2023

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Brazil stocks slump on Lula's first day as president

iShares MSCI Brazil ETF (EWZ) fell more than 7% Tuesday, following the inauguration of Luiz Inácio Lula da Silva.
Meanwhile, other emerging market ETFs were firmly higher, like iShares' MSCI China (MCHI), Turkey (TUR), Emerging Market (EWW), and India (INDA) ETFs.
U.S.-listed shares of Brazilian companies (and companies with significant exposure there) also finished lower, including:
Petrobras (PBR), down 11%
Itau Unibanco (ITUB), down 8%
Banco Santander Brasil (BSBR), down 6%
Ambev (ABEV), down 5%
Vale (VALE), down 4%

Home construction stocks head higher in a down market

On a mostly-lower day for markets, home construction and related names were relative bright spots.
The iShares U.S. Home Construction ETF (ITB) and SPDR S&P Homebuilders ETF (XHB) both finished in positive territory.
Mohawk Industries gained 4.5%, extending a run that's seen it gain almost 9% in a week and 14% in three months.
Floor & Decor, Trex and Installed Building Products were also among the leaders in this group.
Homebuilders DR Horton, Lennar and PulteGroup were all up more than 1% and remain in positive territory through the past month.
Home improvement retail giants Home Depot and Lowe's finished near the flatline.

Shop wisely for e-commerce stocks

It was a mixed picture in the e-commerce sector as names like Amazon and eBay gained more than 1%.
Etsy and Chewy were standouts to the downside, despite a dearth of news on either company. Both of those stocks are down around 20% over the past month but they're holding well above their summer 2022 lows – 60% for Chewy, and 70% for Etsy. They are each trading at a discount to their average analyst price target, and according to FactSet, analysts are split between buy and hold ratings on both stocks. (Only a handful of analysts rate either one as a sell.)

Fintech names, PayPal and Block, jump on upgrades

In payments, PayPal outperformed. It gained almost 5% – its best day since mid-November – after Truist Securities upgraded it to buy and raised its price target to $95 a share from $75.
Block also finished higher following an upgrade to outperform at Baird, which raised its price target to $78 a share from $62.
Smaller names across the fintech spectrum finished lower, including Robinhood, SoFi and Toast.
Affirm Holdings and Coinbase both fell more than 5%. Affirm has had a steep fall in recent weeks, down 38% in a month.

This food stock has serious momentum

Oatly has been ripping higher in recent sessions, including today's, in which it rose over 15%. Before the opening bell, it announced a North American manufacturing partnership, but the stock was already on a tear into the close of 2022. While it still finished out the year with a 78% decline, it's up over 57% from its 52-week low on Dec. 20. Of the 13 analysts that cover the stock and are tracked by FactSet, 62% have a buy rating.

Ethan Kraft | CNBC Breaking News and Markets Producer
@ethan_kraft

The top two most popular retail stocks hit 52-week lows

Apple is down 31.3% in a year. Tesla has fallen 73% over the same period.
On Fidelity, which tracks retail trading, 76% of the Apple shares traded were buys, while 72% of the Tesla shares traded were buys.
Apple now makes up 11.75% of the QQQ, while Tesla has a 2.75% share.
Tesla's option activity was double the volume compared with the 10-day average today.
Microsoft, by the way, is now the top QQQ component, making up 12.6% of the index.
In September, Apple was the top component of the QQQ, making up more than 14% of the key ETF, while Tesla made up 5%.
Today's third-most favorite thing to trade on Fidelity was the TQQQ, which moves three times as much as the QQQ, up or down. Many financial advisors warn investors to stay away from it, but the buy- sell sentiment was split on it today, 50-50.

Why equal-weight funds may get another look

More chatter about equal-weight funds. On CNBC's "Halftime Report," Virtus Investment's Joe Terranova recommended an equal-weight strategy for investors in order to avoid too much exposure to the Apples and Teslas. (Alphabet, Netflix, Nvidia, Amazon are others some consider in the same boat.)
Bank of America ETF strategist Jared Woodard has also been vocal about this strategy as well.
Here's why:
-Invesco Russell 1000 Equal Weighted ETF (EQAL) is up 5% in three months vs. the iShares Russell 1000 (IWB), which is up 3.5% in three months.
-iShares MSCI Equal Weighted USA (EUSA) is up 6% in three months, while the iShares Core S&P Total U.S. Stock Market ETF (ITOT) is up 3.5% over the same period.
-Equal-weighted Nasdaq 100 (QQEW) is up 3% in three months vs. the QQQ, which is down 3.3%.

-Invesco S&P 500 Equal Weighted ETF (RSP) is up 8% in three months vs. the SPY, which has gained 4% in 3 months.
-First Trust Equal Weighted Dow 30 Index (EDOW) is up 13.2% in 3 months vs. 12.7% for the DOW.
-Invesco Small Cap 600 Equal Weighted (EWRS) is up 7.3%.

Insurance stocks suggest premiums are going up

Ritholtz Wealth Management CEO Josh Brown said we're likely to see big increases in insurance premiums ahead.
The S&P Industry is up 9% over the last 12 months, behind only energy and aerospace.
The top performers over the past six months are:
-Arch Capital, up 36%
-Chubb, up 12%
-Progressive, up 10%
-Travelers, up 9%
-W.R. Berkley, up 4.6%
-AllState, up 4.6%
Only AllState has a dividend that beats the S&P average. As of today, it pays 2.5%.