The Tell: ‘Dangerous times’: These aerospace and defense, cybersecurity ETFs are on ‘verge of breakouts’


Heightened geopolitical tensions and cybersecurity concerns may be propelling exchange-traded funds that invest in stocks linked to those areas toward potential “breakouts,” according to Renaissance Macro Research.

Shares of the First Trust Nasdaq Cybersecurity ETF CIBR, -0.61% have jumped 9.5% this year through Thursday, while the iShares U.S. Aerospace & Defense ETF ITA, -1.67% climbed 4.5% over the same period, according to FactSet data. 

“We live in dangerous times and that is being reflected in the stock market,” as the iShares U.S. Aerospace & Defense ETF and First Trust Nasdaq Cybersecurity ETF are “on the verge of breakouts,” Renaissance Macro Research said in a note Friday.

The First Trust Nasdaq Cybersecurity ETF could break out from “a bearish trend,” while the iShares U.S. Aerospace & Defense ETF is “looking to make new all-time highs,” Renaissance Macro said in the note. “We would add to longs in both on breakouts” with “relative confirmation.”

Meanwhile, investors have been monitoring the Russia-Ukraine war as well as tensions between China and the U.S. China has said it’s “ready to fight” after completing combat exercises around Taiwan in response to the Taiwanese president’s recent trip to the U.S., according to an April 10 Associated Press report.

Also this week, Massachusetts Air National Guard member Jack Teixeira, a 21-year-old IT specialist, was arrested Thursday in connection with the leaking of “highly classified military documents about the Ukraine war and other top national security issues.”

Read: U.S. intel leaks: Questions and answers as suspect Jack Teixeira charged in court

Remarking on the leaked Defense Department documents, which were posted on social-media sites, President Joe Biden said Thursday that “there’s nothing contemporaneous that I’m aware of that is of great consequence.”

The top three holdings of BlackRock’s iShares U.S. Aerospace & Defense ETF on April 13 were Raytheon Technologies Corp. RTX, , Boeing Co. BA, -5.56% and Lockheed Martin Crop. LMT, -0.84%, according to details of the fund on the asset manager’s website. 

Read: Boeing says manufacturing issue with supplier could snarl 737 Max production; stock falls

Also see: North Korea says it tested new ICBM that could reach targets in North America

The First Trust Nasdaq Cybersecurity ETF’s largest holdings on April 13 included Fortinet Inc. FTNT, -0.47%, Broadcom Inc. AVGO, -0.75%, Cisco Systems Inc. CSCO, -0.51% and Palo Alto Networks Inc. PANW, +0.79%, according to First Trust’s website.   

The First Trust Nasdaq Cybersecurity ETF was trading 0.8% lower Friday afternoon, while the iShares U.S. Aerospace & Defense ETF fell 1.9%, according to FactSet data, at last check. 

The U.S. stock market was broadly down in Friday afternoon trading, as investors digested big bank earnings, data showing a drop in retail sales in March and Federal Reserve Gov. Christopher Waller’s remarks that the Fed needs to keep raising interest rates because inflation is “still much too high.” 

The Dow Jones Industrial Average DJIA, -0.42% was down 0.5% in Friday afternoon trading, while the S&P 500 SPX, -0.21% shed 0.3% and the technology-heavy Nasdaq Composite COMP, -0.35% fell 0.5%, according to FactSet data, at last check. 

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