After a volatile January, Wall Street started February on a strong footing.The S&P 500, the Dow Jones and the Nasdaq Composite added about 3%, 3.1% and 3.4%, respectively, past week (as of Feb 5, 2021). The S&P 500 and the Nasdaq Composite Index are hovering around new highs.
Solid corporate earnings and expectations of a fat stimulus by U.S. President Joe Biden’s administration have renewed the appeal for the riskier assets. The stronger-than-expected results so far in the fourth quarter have led analysts to raise their estimates for the coming quarters (read:
Ride Market Rally With High-Beta ETFs & Stocks).
Against this backdrop, below we highlight a few leveraged ETF areas that surged last week.
Tech stocks, mainly the Internet ones, have been in fine fettle. Tech companies did extremely well on the bourses as still-existing COVID-19 fears brightened the appeal for stay-at-home stocks. Earnings growth and potential for the same have also been upbeat for the space.
Dow Jones Internet Bull 3X Direxion ( WEBL Quick Quote WEBL - Free Report) (up 29.6%) gained the most last week. Biotech S&P Biotech Bull 3X Direxion ( LABU Quick Quote LABU - Free Report) (up 28.8%) topped in this space. The fund follows the S&P Biotechnology Select Industry Index. The expense ratio of the fund is 1.04% annually. Various researches on coronavirus vaccines, neuroscience and cancer drugs have kept the appeal of the biotech space alive. Banks
This has been a winner of the steepening yield curve trend. The 10-year U.S. breakeven inflation rate, a proxy for annual inflation expectations, has strongly rebounded from the pandemic lows reached in March 2020 to
2.19%. Notably, the spread between the 5-year and 30-year yields have been hovering around the widest levels since February 2016. This has clearly benefited the bank stocks. Microsectors 3X U.S. Big Banks ETN ( BNKU Quick Quote BNKU - Free Report) (up 28.1%) and Regional Banks Bull 3X Direxion ( DPST Quick Quote DPST - Free Report) (up 26.8%) were the clear winners (read: Here's Why You Should Buy Bank ETFs Now). High-Beta
Earnings growth for Q4 has turned
modestly positive, following three straight quarters of decline.Plus,growing launches and rollouts of vaccines and easing lockdown restrictions boosted risk-on trade sentiments. S&P 500 High Beta Bull 3X Direxion ( HIBL Quick Quote HIBL - Free Report) (up 27.2%) was thus a winner past week. Energy United States Oil Fund LP ( USO Quick Quote USO - Free Report) added 5.8% past year. The rally was propelled by hopes of faster economic recovery. The year 2020 was marked by oil glut thanks to an oil price war and the pandemic. Now, the situation has improved and taken a complete turn. This has lent a helping hand to Microsectors U.S. Big Oil Index 3X ETN ( NRGU Quick Quote NRGU - Free Report) (up 26.3%). Small Caps
Solid fiscal stimulus under the Biden presidency also gave a boost to the small-cap stocks, which were mainly focused on domestic economic improvement.
Ultrapro Russell 2000 Proshares ( URTY Quick Quote URTY - Free Report) (up 24.9%) and Smallcap Bull 3X Direxion ( TNA Quick Quote TNA - Free Report) (up 24.8%) were the winners here. Want key ETF info delivered straight to your inbox?
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