What happened

The Ark Innovation ETF (ARKK -0.80%) saw its stock price rise 9.9% this week from last Friday's close through 11 a.m. ET today, according to S&P Global Market Intelligence. The ETF is up about 42% year to date (YTD) as of Feb. 3, trading at around $44 per share as of 11 a.m. ET.

The ETF outperformed the major market indexes, as the S&P 500 was up 2.6%, the Dow Jones Industrial Average gained 0.4%, and the Nasdaq Composite jumped 4.8% this week, as of Feb. 3 at 11 a.m. ET.

So what

The Ark Innovation ETF is an exchange-traded fund run by famed portfolio manager and founder and CEO of Ark Investment Management, Cathie Wood. It is a little different from most, as it is actively managed, with the portfolio picked by Wood and her team, who look for companies that are disruptive innovators.

The fund typically holds 35 to 55 stocks, with the three largest holdings, as of Dec. 31, being Zoom Video Communications, Exact Sciences, and Tesla.

This week's strong performance capped off the ETF's best-ever January, as the fund gained 28% last month. It follows a brutal 2022, when it was down 67% for the year.

This week's performance can be attributed to a good week for technology stocks overall, as the Nasdaq gained 5%. But more specifically, its biggest holdings, like Tesla, are off to fast starts. Tesla reported record earnings in the fourth quarter, and its stock price is up 60% YTD. Exact Sciences is up 38%, and Zoom is up about 20% YTD.

The Federal Reserve's decision on Wednesday to raise interest rates at a lower rate, just 25 basis points, was also good news for technology stocks in particular. 

Now what

It has been a great month for beaten-down technology stocks, which buoyed the Ark Innovation ETF.

In an interview with Bloomberg this week, Wood said innovative companies, like the ones that make up her ETF, have been the primary victims of aggressive interest rate hikes. But with rate hikes gradually decreasing and perhaps flattening out over the next few quarters, that's good news for Ark investors.

It is hard to get too excited about Ark just yet though, as there is still a potential for a recession, inflation is still high, and another correction is not out of the question. 

In the near term, look for earnings reports from its largest holdings this month, including Roku, Block, Shopify, Zoom, and Exact Sciences.