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Last week was downbeat for Wall Street mainly due to the rate hike speculation. The S&P 500, the Dow Jones, the Nasdaq Composite and the Russell 2000 lost about 1.9%, 3.5%, 0.3% and 4.2% last week.Though the Fed held interest rates steady at a near-zero level in its latest meeting, the forecast revealed that 13 members of the Federal Open Market Committee believe the Fed will hike rates in 2023 and the majority expect at least two hikes that year, per a CNBC article.
Seven of the 18 members see the Fed increasing rates as early as 2022.The Fed also hiked its inflation forecast for the year. The central bank now expects inflation to jump to 3.4% this year, higher than its previous forecast of 2.4%. PCE inflation expectation has gone up to 2.1% for 2022 from 2% projected in March and to 2.2% for 2022 (from 2.1%) (read: Fed Rate Hike in the Cards? ETFs to Buy).
Against this backdrop, below we highlight a few leveraged ETF areas that have won last week.
Inverse Gold
Gold prices remained subdued last week thanks to the spike in the bond yields and the resultant strength in the greenback. The Fed’s increased expectations for inflation also added to the dollar strength. As a result, gold mining stocks nosedived and inverse gold mining ETFs gained.
Big banks or financial stocks initially gained on the rate hike cues as long-term bond yields jumped. However, benchmark bond yields nosedived from 1.57% on Jun 16 to 1.45% on Jun 18. As a result, such drop in bond yields weighed on bank stocks and ETFs.
Microsectors -3X U.S. Big Banks ETN (BNKD - Free Report) – Up 26.6%
High-beta stocks also took a beating on rising ate worries. As a result, this inverse high-beta ETF outperformed last week.
S&P 500 High Beta Bear 3X Direxion (HIBS - Free Report) – Up 18.2%
Inverse Mid-Cap
This segment was yet another victim of rate hike talks. Vanguard Mid-Cap ETF (VO - Free Report) lost about 2.5% last week. As a result, inverse leveraged mid-cap ETF surged materially.
Ultrapro Short Midcap 400 Proshares (SMDD - Free Report) – Up 16.2%
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4 Best Inverse/Leveraged ETFs of Last Week
Last week was downbeat for Wall Street mainly due to the rate hike speculation. The S&P 500, the Dow Jones, the Nasdaq Composite and the Russell 2000 lost about 1.9%, 3.5%, 0.3% and 4.2% last week.Though the Fed held interest rates steady at a near-zero level in its latest meeting, the forecast revealed that 13 members of the Federal Open Market Committee believe the Fed will hike rates in 2023 and the majority expect at least two hikes that year, per a CNBC article.
Seven of the 18 members see the Fed increasing rates as early as 2022.The Fed also hiked its inflation forecast for the year. The central bank now expects inflation to jump to 3.4% this year, higher than its previous forecast of 2.4%. PCE inflation expectation has gone up to 2.1% for 2022 from 2% projected in March and to 2.2% for 2022 (from 2.1%) (read: Fed Rate Hike in the Cards? ETFs to Buy).
Economic data have been overwhelming. Per the Fed’s recently-released data, total industrial production rose 0.8% in May. Going on, there was a 0.9%, 1.2% and 0.2% rise, respectively, in manufacturing output, mining and utilities production (read: ETFs to Gain as US Industrial Output Rises in May).
Against this backdrop, below we highlight a few leveraged ETF areas that have won last week.
Inverse Gold
Gold prices remained subdued last week thanks to the spike in the bond yields and the resultant strength in the greenback. The Fed’s increased expectations for inflation also added to the dollar strength. As a result, gold mining stocks nosedived and inverse gold mining ETFs gained.
Microsectors Gold Miners -3X ETN (GDXD - Free Report) – Up 37.5%
Gold Miners Bear 2X Direxion (DUST - Free Report) – Up 24.6%
Inverse Financials
Big banks or financial stocks initially gained on the rate hike cues as long-term bond yields jumped. However, benchmark bond yields nosedived from 1.57% on Jun 16 to 1.45% on Jun 18. As a result, such drop in bond yields weighed on bank stocks and ETFs.
Microsectors -3X U.S. Big Banks ETN (BNKD - Free Report) – Up 26.6%
Financial Bear 3X Direxion (FAZ - Free Report) – Up 20%
Inverse High-Beta
High-beta stocks also took a beating on rising ate worries. As a result, this inverse high-beta ETF outperformed last week.
S&P 500 High Beta Bear 3X Direxion (HIBS - Free Report) – Up 18.2%
Inverse Mid-Cap
This segment was yet another victim of rate hike talks. Vanguard Mid-Cap ETF (VO - Free Report) lost about 2.5% last week. As a result, inverse leveraged mid-cap ETF surged materially.
Ultrapro Short Midcap 400 Proshares (SMDD - Free Report) – Up 16.2%
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>