We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Wall Street was downbeat last week due to mounting inflationary pressures, rising rate worries and geopolitical tensions. The S&P 500, the Dow Jones, the Nasdaq Composite and the Russell 2000, declined 2.8%, 1.9%, 3.8% and 3.2%, respectively.
As far as rates are concerned, the benchmark treasury yield started the week with 2.85%, hit a high of 2.93% and then closed the week at 2.90%. Fed Chairman Jerome Powell said the central bank is committed to raising rates “expeditiously” to tame inflation.
Investors took the statement as an interest rate hike of 50 basis points in May as inflation is at a 40-year high. “It’s absolutely essential to restore price stability,” Powell added, per a CNBC article (read: A 50-Bp Rate Hike in May? Sector ETFs to Win).
Also, the recently released FOMC minutes of the March meeting highlighted the central bank’s plans to control the inflation levels by larger interest rate hikes. It also outlined the method and magnitude of reducing the balance sheet holding around $9 trillion in assets.
Notably, the Federal Reserve officials have decided to shrink their balance sheet by approximately $95 billion a month. More precisely, Fed plans to reduce $60 billion in Treasuries and $35 billion in mortgage-backed securities, phasing in over three months, starting May (per a CNBC article).
Against this backdrop, below we highlight a few inverse/leveraged ETF areas that won last week. Most winners were the outcome of the rising rate trend.
As rising rates are negative for gold bullion investing (as gold is a non-interest-bearing asset) and mining companies often act as a leveraged trade of the underlying metal, inverse gold-mining ETF GDXD gained massively.
Inverse leveraged FANG ETF was a winner last week due to two factors. One is the crash in Netflix (NFLX) shares due to surprise subscriber loss last quarter. And the second is the Fed’s faster rate hike stocks. Tech stocks normally fare better in a low-rate environment.
Dow Jones Internet Bear 3X Direxion (WEBS - Free Report) – Up 26.9%
Inverse Leveraged internet stocks also gained last week due to rising rate trends. Netflix’s share slump also caused its share of damage to the Internet industry.
Etfmg Prime Junior Silver Miners -2X ETF – Up 26.4%
The crash in silver mining stocks was also due to the rising rate trends. Rising rates will result in a higher greenback, which is inversely related to the metal prices.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5 Best Inverse/Leveraged ETFs of Last Week
Wall Street was downbeat last week due to mounting inflationary pressures, rising rate worries and geopolitical tensions. The S&P 500, the Dow Jones, the Nasdaq Composite and the Russell 2000, declined 2.8%, 1.9%, 3.8% and 3.2%, respectively.
As far as rates are concerned, the benchmark treasury yield started the week with 2.85%, hit a high of 2.93% and then closed the week at 2.90%. Fed Chairman Jerome Powell said the central bank is committed to raising rates “expeditiously” to tame inflation.
Investors took the statement as an interest rate hike of 50 basis points in May as inflation is at a 40-year high. “It’s absolutely essential to restore price stability,” Powell added, per a CNBC article (read: A 50-Bp Rate Hike in May? Sector ETFs to Win).
Also, the recently released FOMC minutes of the March meeting highlighted the central bank’s plans to control the inflation levels by larger interest rate hikes. It also outlined the method and magnitude of reducing the balance sheet holding around $9 trillion in assets.
Notably, the Federal Reserve officials have decided to shrink their balance sheet by approximately $95 billion a month. More precisely, Fed plans to reduce $60 billion in Treasuries and $35 billion in mortgage-backed securities, phasing in over three months, starting May (per a CNBC article).
Against this backdrop, below we highlight a few inverse/leveraged ETF areas that won last week. Most winners were the outcome of the rising rate trend.
ETFs in Focus
Microsectors Gold Miners -3X ETN (GDXD - Free Report) – Up 32.86%
As rising rates are negative for gold bullion investing (as gold is a non-interest-bearing asset) and mining companies often act as a leveraged trade of the underlying metal, inverse gold-mining ETF GDXD gained massively.
S&P Biotech Bear 3X Direxion (LABD - Free Report) – Up 28.7%
The rising rate trend is negative for growth sectors like tech and biotech. No wonder, this inverse-leveraged biotech fund was a winner last week.
Microsectors Fang+ -3X ETN (FNGD - Free Report) – Up 28.3%
Inverse leveraged FANG ETF was a winner last week due to two factors. One is the crash in Netflix (NFLX) shares due to surprise subscriber loss last quarter. And the second is the Fed’s faster rate hike stocks. Tech stocks normally fare better in a low-rate environment.
Dow Jones Internet Bear 3X Direxion (WEBS - Free Report) – Up 26.9%
Inverse Leveraged internet stocks also gained last week due to rising rate trends. Netflix’s share slump also caused its share of damage to the Internet industry.
Etfmg Prime Junior Silver Miners -2X ETF – Up 26.4%
The crash in silver mining stocks was also due to the rising rate trends. Rising rates will result in a higher greenback, which is inversely related to the metal prices.