Wall Street was downbeat last week with the S&P 500, the Dow Jones, the Nasdaq Composite and the Russell 2000 losing about 3.3%, 3%, 4.2% and 4.7%, respectively. New York Fed President John Williams recently said he expects interest rates to continue higher and to remain at those levels until inflation is controlled, as quoted on CNBC. Fed chief Powell too recently commented that taming U.S. inflation will cause "pain" for American families and businesses as rate hikes will continue.

As rising rate worries have been prevalent with the Fed hiking rates faster and fatter this year, both the bond and stock investing are at worse. The Federal Reserve raised the target range for the fed funds rate by 75bps to 2.25%-2.5% during its July 2022 meeting, marking the fourth consecutive rate hike. Per CME group as of Sep 3, 2022 there is 57% probabilities of a 75-bp rate hike in the September meeting while 43% probability is of a 50-bp rate hike.

The United States added 315,000 jobs in August as companies keep hiring albeit at slower clip. The government reported Friday that last month's job gain was down from 526,000 in July and below the average gain of the previous three months. The unemployment rate jumped to 3.7%, two-tenths of a percentage point higher than expectations. Wages also rose, with average hourly earnings up 5.2% from a year ago, slightly lower than the estimate.

Against this backdrop, below we highlight a few top-performing ETFs of last week that gained handsomely.

ETFs in Focus

Breakwave Dry Bulk Shipping ETF (BDRY Quick QuoteBDRY - Free Report) – Up 10.9%

Long-term ocean freight rates jumped yet again in August, up 4.1% sequentially and 121.2% higher year over year. The latest global data, crowd-sourced by Oslo-based Xeneta for its Xeneta Shipping Index (XSI), revealed that, despite a decline in spot rates, uneven demand and ongoing supply chain crisis will lead to another solid year of profits for the world’s leading carriers, per an article published on hellenicshippingnews.com.

Simplify Interest Rate Hedge ETF (PFIX Quick QuotePFIX - Free Report) – Up 9.9%

Rising rate worries made this ETF a winner. This ETF is active and does not track a benchmark.  The Simplify Interest Rate Hedge ETF seeks to hedge interest rate movements arising from rising long-term interest rates, and to benefit from market stress when fixed income volatility increases, while providing the potential for income (read: 75-Bp Rate Hike in September? ETFs to Play).

The fund’s strategy includes initial investment of 50% of NAV in 7-year OTC payer swaption on the 20-year rate struck at 4.25%, providing direct exposure to rising rates. Option position is a strategic exposure to interest rates, expected to be reset only after extended periods of time or extreme rate moves. Option term and rate maturity are chosen to minimize cost of ownership; option strike and term chosen to maximize convexity. The fund charges 50 bps in fees.

Axs Tesla Bear Daily ETF (TSLQ Quick QuoteTSLQ - Free Report) – Up 6.4%

This ETF is active and does not track a benchmark. The AXS TSLA Bear Daily ETF seeks daily investment results, before fees and expenses, that correspond to the inverse of the daily performance of the common shares of Tesla, Inc, which was off 5% last week.

A Piper Sandler analyst cautioned that Tesla stock price may head lower in the coming weeks, on the back of 1) shorter wait times; 2) China weakness; 3) geopolitics; 4) and rising interest rates (higher WACC), as quoted on investing.com.

Tuttle Capital Short Innovation ETF (SARK Quick QuoteSARK - Free Report) – Up 5.2%

This ETF is active and does not track a benchmark. The AXS Short Innovation Daily ETF seeks the daily inverse investment results and is intended to be used as a short-term trading vehicle. As the broader market dipped last week, this inverse ETF gained.