The world’s largest exchange-traded fund, S&P 500 ETF Trust, which trades by the ticker “SPY,” lost almost $7 billion in investments the last day of January alone and was down over 6% for the month.
Popular with investors, SPY tracks the S&P 500 Index, which has lost over 5% of its value in 2022, mirroring a decline in the overall market that’s seen tech and speculative stocks hit hard. But SPY is not the only one taking a hit. Invesco QQQ Trust Series 1 lost $6.2 billion in January. That’s its largest “redemption” – an outflow of investor cash – since the dot-com bubble burst in the early 2000s. The fund focuses on NASDAQ tech stocks and took a 10% hit; NASDAQ is down 12% so far this year.
Experts attribute these losses to signals from the Federal Reserve that it will raise interest rates to combat inflation.
January was the worst month overall for stocks since the arrival of COVID-19 in March 2020 sent markets plunging. However, the overall EFT market has remained strong, gaining $23 billion in net inflows in the first month of the year, according to Bloomberg. Meanwhile, February is looking to be a better month for the stock market as a whole.