5 Reasons Why Low-Volatility ETFs Matter Now
Wall Street delivered a downbeat performance last week. The S&P 500 Index fell 1.6%, the Dow Jones fell 0.9%, the Nasdaq Composite plunged about 2.9% and the Russell 2000 retreated 0.5% last week.
The renewed geopolitical tensions and the tech slump mainly led to the slump. Oil prices jumped last week, with United States Oil Fund LP USO gaining 10.7% due to the flare-up in tensions between the United States and Iran.
Against this backdrop, below we highlight a few reasons that indicate that low-volatility ETFs could be the best picks now.
Trump Announces 50% Tariffs on Canada
On July 20, 2026, President Trump signed three proclamations that would impose 50% tariffs on a broad range of Canadian imports in response to Canada’s policies on automobiles, alcohol and dairy products, as quoted on Yahoo Finance.
According to a senior administration official, the tariffs would affect products “ranging from wine to hockey sticks to cement.” The automobile-related proclamation alone spans 18 pages, listing goods that would be subject to the new duties if the measures take effect, per the source.
These tariffs will apply even if the goods were previously exempted under the US-Mexico-Canada Agreement (USMCA). Canada — America’s largest export market — has drawn President Trump’s criticism over its retaliatory trade measures.
Hormuz Tensions Deepen
President Trump announced last week that the United States would reimpose a blockade of the Strait of Hormuz and levy a 20% fee on cargo passing through the strategic waterway, escalating tensions in the Middle East.
The blockade began on July 14, 2026, with U.S. Central Command saying it would enforce restrictions on vessels traveling to or from Iranian ports and coastal areas (read: Leveraged Oil ETFs Likely to Surge as Hormuz Tensions Deepen).
Vessel traffic through the Strait of Hormuz has declined since then, as escalating U.S.-Iran tensions prompt shipowners to avoid the key energy corridor. Lloyd’s List Intelligence recorded just 53 vessel transits in the week through July 20, down 66% from 157 the previous week, as quoted on CNBC.
Moreover, the U.S. military said a service member was killed after an Iranian attack in northern Iraq on Saturday, a day after an attack on a base in Jordan killed two U.S. soldiers, as quoted on BBC.
Inside the Tech Selloffs
Investors are becoming increasingly cautious about the AI trade as concerns over the sustainability of corporate spending on AI weigh on sentiment. The technology sector, particularly semiconductor stocks, has led the recent market weakness as rising concerns over AI-related capital expenditures and rich valuations dampen investor sentiment.